Thank you, Mr. Chairman. The committee then met with the Minister and his officials on Monday, September 26, 2005, to review the draft business plan of the Department of Transportation.

Members also received a briefing from the Minister of Finance on January 17, 2006, outlining the changes to the budget of the Department of Transportation since the committee reviewed the business plan in September.

Committee members made note that the department is proposing to spend $83 million in operations expense and $46 million on capital projects in fiscal year 2006-2007.

Committee members offer the following comments on issues arising out of the review of the 2006-2007 Draft Main Estimates and budget-planning cycle.

Deh Cho Bridge

The Deh Cho Bridge is being built through a public-private partnership arrangement between the GNWT and the Deh Cho Bridge Corporation. The Deh Cho Bridge Corporation will raise the capital, design, build, operate and maintain the Deh Cho Bridge. The Government of the Northwest Territories will pay the corporation for the bridge over a 35-year period, largely from toll revenues collected from the traffic crossing the bridge and savings from discontinued ferry operations and winter road construction.

A significant cost increase to construct the bridge could impact and increase the bridge tolls the GNWT has to collect to pay for the bridge. An increase to the tolls may mean communities north of the bridge may have to pay more for goods and services than current prices that are already high due to transportation costs.

In the 2006-2007 Main Estimates, the lease costs for the Deh Cho Bridge are projected to rise from $57 to $70 million dollars. The government says that this figure still keeps the bridge costs within the permissible toll rate of $5 to $6 per tonne. The committee, however, is concerned about delays to this project. For example, traffic is not expected to roll across the bridge until 2008, three years later than the department's original projections. Also, there are only two remaining contractors left to bid on the bridge construction and the increasing costs for steel to build the bridge is of a concern.

Finally, the government has just added greater expense and further complications to the project by taking over the operations of the Fort Providence ferry and its employees. Thank you, Mr. Chairman. That concludes the Department of Transportation committee comments. Thank you.

Thank you, Mrs. Groenewegen. I'll now go to general comments. Oh, sorry; before we get to general comments, we'll ask the Minister if he wishes to bring in witnesses.

Thank you, Mr. Chairman. Yes, I do.

Thank you. The Minister wishes to bring in witnesses. Does committee agree?

Agreed, we'll have general comments after the witnesses arrive. Thank you.

Thank you, Minister McLeod, for bringing in the witnesses. If you could, Minster McLeod, please introduce the witnesses that you have with you this afternoon.

Thank you, Mr. Chairman. Mr. Chairman, on my right I have Mr. Russell Neudorf, deputy minister of Transportation and Mr. Daniel Auger, the assistant deputy minister for Transportation.

Thank you, Minister McLeod. Welcome, Mr. Auger and Mr. Neudorf, to our proceedings this afternoon. We'll now go to general comments on the Department of Transportation's main estimates. General comments, Ms. Lee.

Thank you, Mr. Chairman. I wish to offer a few general comments to the Department of Transportation and I just want to, first of all, recognize the fact that the department is spending $46 million on capital projects and $83 million in operations expense and that's a good thing.

I think that's an improvement in terms of capital spending in comparison to years before, and I think this is the kind of department where I'd like to see more and more capital money going into, because this is the stuff that government is supposed to do. Government needs to build highways, and bridges, and airports. Those are the capital investments that we need to make, especially in the North at this time.

I wanted to also recognize the work of the Minister of Transportation. I'm not completely unable to compliment Ministers and I know that the compliment has to be given when it's due, because a lot of money that he's gotten has come from the federal government. I guess it might have something to do with the fact that there have been opportunities for federal investment because so many of our projects rely on federal funding that when we do get them, credit is given to the Minister.

Also, I'd like to tell the Minister that I appreciate the progress he's making on Highway 3. I could almost see the end of that road and I want to make sure that the Minister invites us all when he finally finishes that. I want to say, for the record, that I support the Mackenzie Valley highway going all the way to Tuk and I hope that the Minister will continue to work on that and sooner than later, and hopefully not too far distant in the future we can all drive from one end of the Northwest Territories to the other. I used to talk to the former deputy minister about how my mother and I enjoy driving from Halifax to Victoria and, well we drove from Halifax to Yellowknife and for her birthday, I think her 70th birthday. I asked her what she wanted to do and she wanted to finish the country. So we drove to Victoria and back, and I told her for her 80th I'd take her to the Yukon, but she said we have to do that sooner than her 80th and I'm hoping that my mom's healthy enough to be around for a long time. I think and I hope to be able to drive her to Tuktoyaktuk without having to go to the Yukon. I really want to state, for the record, my support. I think some of the economic projects that are happening in the North gives us an opportunity to do that and that's always a good thing.

I want to, once again, state my support for the Deh Cho Bridge. I've been a supporter of that since the beginning and I know that, because of the rises in commodity prices and the international markets that we have to reckon with, it is a difficult time, but I don't know if we will ever have a really good time. As long as China keeps going for the next 50 years, well, I don't know if we're going to see a decline in steel prices and such, but that's the kind of vision I support. At least when we build highways and bridges one good thing about it is that they can't be built in Calgary, you know. They've got to be built here and they stay here. I support that. I do understand that we have to do due diligence to make sure that we have control over the cost and we do it as economically as possible, but when you look at the weather system changing lately, I don't know if we can rely on winter roads anymore. I mean, we have to really work hard to replace much of the winter roads into all-weather roads and I think our industries around Yellowknife especially rely on that, and I think it could be the case for all of the Territories. So I just want to speak in support of that.

Overall, I can't wait to get the Highway No. 3 finished. I had the opportunity to look at the back rooms of the airport renovation. That's pretty impressive and I know that the changes happened January 1st and I didn't hear anything about it. So I guess the transfer and the changes to the security system there worked out well.

So I believe that I'm going to have some more questions as we go through the detail, but I wanted to make that general comment and tell the Minister to keep up the good work. I know I don't bother him very much, but I do watch what's going on and whenever I do go to the Minister's office, I usually get very good service. So I want to take this opportunity to thank them. Thank you.

Thank you, Ms. Lee, for the general comments. General comments. Mr. Menicoche.

Thank you very much, Mr. Chair. Indeed, the Department of Transportation has huge implications for constituents I represent. I've got six communities in my riding alone and the main connect is a highway system or a winter road system, especially during the winter months. So that's how we get our freight in and out of almost all the communities. I see that there's been some dedication in the upcoming budget to address some of the concerns that were brought out by the Minister when he toured the riding, particularly Nahanni Butte's concern of continuing the creation of their access road and trying to get some resolution there, as well as addressing Jean Marie's contract to maintain that road, even upgrade that access road one step higher to classify it as a highway. I will be looking at that, as well as allowing other communities to participate in some of the contract work that's in and around their communities.

That's something that's picking up steam, is the ability to negotiate contracts, particularly with highways around our communities. Like Fort Liard, I brought up that negotiated contracts that are being reconsidered and, well, I'm finding out that the government is actually doing away with them. They're talking about consultation, but they're actually doing away with negotiated contracts and practices even before a review is occurring. But some of the communities are saying hey, wait a minute, this is our traditional area and we're requesting preferential treatment. Particularly just getting back to Fort Liard alone, they're saying that that highway that's going by Fort Liard was originally intended to go, like, 30 kilometres away from the community, but through some arrangements with the federal government at that time, there was a commitment for a lifetime contract for that community to take care of their roads in their proximity and if that's what people want, I think that our government should start looking at it.

In questioning last week in the House, I brought up the whole concept of set-aside policy, like an aboriginal set-aside policy. I know now we've got, like, negotiated contracts, but I still think it's a thing of the past because things are changing and lots of Members are questioning. Okay, these are public dollars, why aren't people having opportunities to bid on it? What the people are saying in the communities is that we're here, the majority of our communities are aboriginal and we should have the opportunity for that work, for the building capacity, that there are companies for proximity work. One of the ways the federal government does it, in questioning the Premier, he said, well, it's not really one of the best systems out there, but it is a system entrenched in public policy that people know that because you are a majority aboriginal population community, that you will be given preferential treatment for those contracts. So when it's entrenched like that as a public policy, then people know

what the government's doing. But with the negotiated contract policy, you know, I can see where there's room for questioning why you keep giving it to that same business over and over, but with a new way of modifying or doing things, I think we will have a tool in order to negotiate with these 100 percent aboriginal communities and we could look at for some of the communities like Fort Simpson, which is like a 50 percent aboriginal, there's a way to massage that policy.

But, I really think that we have to look at this because the contracts and particularly the highway contracts, like around Fort Simpson and indeed Fort Resolution, that if our communities aren't allowed to participate in the contracting opportunities, then it's jobs that aren't there for our people and we're moving toward an income support economy. That's like going backwards, especially with unprecedented growth. We're proud of our North, but we keep forgetting that we've got economic depressed regions even though we've got skyrocketing growth in the capital, for instance, but out in the regions for the most part one could argue that we're still economically depressed. So we do need this work and these contracts, and our people make the argument that we're still not sustainable because every time we find a good worker, we train them, they're either taken up with government or move into bigger industries like Diavik or anybody else. It's not a case of not being able to perform up to the expectations of that negotiated contract. We're striving our best and the communities are striving their best in order to provide the service, to build up their businesses, but as the workforce passes through them, as our communities train workforce for other people, like only because they can offer better salaries and better compensation packages that people aren't staying around long enough and the ones that are staying around long, are quite a long time like in the case of the ferry situation in Fort Simpson. Just because our negotiated contract kind of held them back from providing fair wages too. They had that contract I don't know like 10 or 12 years, for whatever reason the workers were paid not too much from what they originally started at 10 years ago. But those are just some of the barriers that are happening, Mr. Chair.

In terms of a negotiated contract, the communities are saying, well, we still want those opportunities and we still want to build up our businesses. One of the biggest barriers is that, sure, we're supposed to be building capacity, buying capital equipment, but it's taking much longer than we thought. Now like in the case of Nuni or the joint venture in Fort Simpson and now they're looking at going out with public bid, but then their equipment is too old now so it's hard for them to even consider making a competitive bid, particularly if they're going to have to replace older equipment. I'm not too sure about the government procurement rules for contracting this out, or how old the equipment's got to be, but that's what's happening. Due to various barriers and pressures, the equipment wasn't being replaced adequately. Quite often when a new contract comes around and they know that contract is for certain, then they will invest into new equipment.

Just with that, I have to speak in favour of continuing the negotiated contracts right now because I know that our negotiated policy hasn't changed. We haven't had adequate consultation. We said we were going to go out into the communities. In fact, that's what's going to happen this coming year, but yet, Mr. Chair, we're already changing the guidelines without having it in place adequately. Let's face it; transportation is one of the huge income providers to our regions and to our communities, especially in the Nahendeh district. We say that we're a fixed economy, and what a fixed economy means, Mr. Chair, is that the pie, the amount of money that's going into the community that's generating and stimulating revenue and income is always the same. If we take out a chunk like this, then it's money that goes somewhere else.

So I guess if anything, Mr. Chair, if I can get the Minister to comment on the negotiated contracts, why is it changing so suddenly? We thought we had some time. Just with that, then, Mr. Chair, thanks.

Mahsi, Mr. Menicoche. Mr. McLeod.

Thank you, Mr. Chair, and I thank the Member for his comments. We certainly have worked hard with the communities over the last while to have some good discussion on the projects in the different areas, and different regions, and some of the work that's going to be happening and taking place in Nahanni. We still have a lot of discussions that have to take place, including with the community of Jean Marie on their public access road. We certainly recognize our role in terms of generating employment through our contracts.

I think it should be clear, first of all, that we haven't moved away from negotiated contracts. In fact, we just signed a fairly big contract in the Member's riding and I think we have around three or four other fairly large contracts where they were negotiated. A lot of them are coming to an end. When we do have the negotiated contract process take place, though, we want to ensure that it's there for a reason. It's not there just to generate employment. There is a part of the policy that requires us to look and see if there's going to be skill developed, capacity developed and also assets acquired, and that there's equity participation by the company or the community. So there are a number of things we take into consideration.

In the last while, it's become increasingly more difficult to sit down and just negotiate a contract in the different communities. There is a significant amount of companies that have developed over the last while. They want to acquire some of this work. They're not happy that they don't have an opportunity to at least bid on it or discuss it. So it really makes our rule very difficult. So while we haven't moved away from negotiating contracts, we want to be certain that there is a benefit and how long does it take to develop that benefit. The intention was to build capacity fairly quick, and in some cases we are reaching close to 16 years, 15 years, 18 years. So that's the situation. We really have to review the situation to see what we're trying to achieve.

In some areas of the Northwest Territories where there are settled claims, especially with the Gwich'in, there is an MOU that spells out exactly our targets that we want to ensure that the Gwich'in have in terms of contracts. In other areas, especially in the southern areas, it's a lot more difficult because these are the areas in the Territories where there is no settled land claim. However, there is a large number of the private contractors in the southern part of the Territories, and also in the Sahtu we've seen a huge increase in the number of contractors. So it makes it very difficult just to go out and say we're going to negotiate the contracts, because it's not going to be that easy anymore. There are more people playing the game nowadays and we have to try to give everybody a fair chance, a fair opportunity.

Thank you, Minister McLeod. Next on the list for general comments I've got Mr. Yakeleya.

Thank you, Mr. Chairman. I want to make a few comments here to the Minister. I want to probably get a response after. The first one I want to ask the Minister is in his opening remarks I want to ask about the impaired driving programs. You made a contribution to the school in our St. Patrick's School I believe last year and that you made an in-kind donation to it. I think I asked him last year in terms of what type of support or what kinds of programs are run in the Territories and if he could look at other schools in the Northwest Territories to see some kind of a campaign in terms of that, because it's very serious now with the increased volume of traffic in all of the Mackenzie Valley on our roads and here in Yellowknife or down the whole valley. We need some kind of a campaign. I think it is very powerful and it would work very good for us, but it needs to have some attention in our region. If he would consider looking maybe when we go into detail in the budget in terms of improving some education programs that will help our people in our region and other regions that didn't receive any type of support. That's one question I want to ask the Minister for. I have other general comments, Mr. Chairman. Thank you.

Mahsi, Mr. Yakeleya. Minister McLeod.