Thank you, Mr. Braden. Mr. Bell.

Mr. Chairman, RWED formerly was a member and when we split the departments, we had to make a decision about where that membership would reside, and it was determined that it was best left with Environment and Natural Resources in terms of their conservation agenda. Thank you, Mr. Chairman.

Thank you, Mr. Bell. Mr. Braden.

Mr. Chairman, it seems that with the extensive energy management initiatives that this department has undertaken, it would be quite noticeable in its absence if it wasn't at the table with the other stakeholders in the Arctic Energy Alliance. I would really like to ask the Minister to reconsider why they are not part of this table and look at joining up and being part of the team. It just doesn't track good, because one department is now two that there isn't a mandate and a role to play there, Mr. Chairman.

Thank you, Mr. Braden. Mr. Bell.

Mr. Chairman, currently underway is a government review of the Arctic Energy Alliance. We're looking at the membership, not only government departments, but more broadly. We're looking at the private sector interests and stakeholders that are involved, or should be involved. I know the Members are aware that the Public Utilities Board is a member. We're talking about also the NWT Association of Municipalities. So there are a number of partners and stakeholders, and we're conducting this review and will be coming forward with more shortly.

Thank you, Mr. Bell. Mr. Braden.

That's all for now, Mr. Chair. Thanks.

Thank you, Mr. Braden. Ms. Lee.

Thank you, Mr. Chair. On the minerals, oil and gas, I would like to ask the Minister some questions about the diamond industry. Lately, we have had some issues with regards to understandings about an agreement between the diamond producer and diamond cutting and polishing business. I appreciate the fact that these are goings on between two private companies. I am sensitive to the confidentiality and all the issues related to that, but I do believe, in this regard, there is a role for the government to play in terms of clarifying some misunderstandings, or misinterpretations, of agreements and also to resolve outstanding issues. Larger than that, because I have been listening to other issues such as some misinterpretation about clauses impact benefit agreements with that. I would like to know whether there is any formal mechanism in place that this government has to process, or procedure for these parties to work out their differences. Has the Minister considered doing that? All of these are works in progress. None of the agreements can be perfect. There should always be room for bringing together different parties to discuss what their misunderstanding or misinterpretations might be and work them out. Has the Minister given thought to that, or would he be prepared to give a thought to organizing some kind of more established process? Thank you, Mr. Chair.

Thank you, Ms. Lee. Mr. Bell.

I thank the Member for the question, because I think there has been some confusion in the back and forth in the House and how the media has interpreted what has gone on. I would like to say, for the most part, that I think there is a very strong and good relationship between the mines and the cutting and polishing industry here. I think they have been supportive. I think 99 percent of their business dealings have been very amicable and very successful.

There is this one concern with two of the factories who have similar ownership, but one concern with BHP Billiton. It really relates to the pricing and their perception that they are being charged a price higher than customers would receive in Antwerp. The question was asked in the House about socio-economic agreements. During those socio-economic negotiations and discussions, a side discussion at the same time was related to the provision of rough for factories. At that time, not actually in the socio-economic document per se, but at the same time, we had an exchange of public commitments, an exchange of letters. We are talking about 1998, 1999, between our government and BHP. In those public pronouncements and letters, there is the commitment to provide rough to our local cutting and polishing industry. In exchange for that, the government of the day also agreed that they wouldn't impose additional specifically targetted taxes or burdens on the company as long as it lived up to its obligation. So there is some history here. We agreed that we wouldn't layer on additional commitments. I would say that if there is mutual recognition that something is not working for both parties, there would be an opportunity for both the government and the mine to come forward and decide that it wanted to reopen a part of that agreement, but it would take an agreement on both parts. Thank you, Mr. Chair.

Thank you, Mr. Bell. Ms. Lee.

Thank you. I guess I was looking for some sort of formal mechanism because I was trying to sort of look to the solution for future events like this than concentrating solely on what is going on now, but since the Minister has mentioned this, I understand the issues are not just pricing but also assortment of diamonds and selection of them. I think that is the second issue. In that regard, I would be satisfied with just hearing from the Minister as to where we are with this process because I am not so comfortable talking about the details about two companies in question unless, of course, it was brought to this House in a budget. Anyhow, I would like to know if the Minister could update us on where we are with that specific issue.

Another thing about this issue is that I was so surprised to learn that there is nothing in writing about the agreement that the cutting and polishing plants had with a diamond producer. It just floors me that this government worked really actively to set up a secondary diamond industry here. A lot of money went into it. There were lots of guarantees done up, and yet there was no written, formal agreement between a diamond producer and the government, or between a diamond producer and the cutting and polishing plants, as to exactly what the understandings are about the supplies, and assortments, and pricing. Maybe there is one. Maybe it is the question about details, but from my understanding, there is really not anything in writing. I think that should serve as a notice to make sure that does not happen in future with

any other industries or companies that this government gets involved in, whether it is bringing two parties together from outside or not.

The Alaskan housing project went on without a written agreement. In my previous life as a lawyer, I just cannot believe that a government-to-government relationship could happen without things in writing. You would have to really try hard not to have anything in writing. That is one more thing.

I have a question about the breakdown of this new marketing idea Rare in Nature. I have to tell you that, last summer, I was on one of my road trips in a big southern city. I was in a mall. I ran into this humungous poster that says diamonds from Northwest Territories, cut and polished. It was so amazing to see that. I asked a sales clerk if I could take a picture of that poster. I wanted to rip the poster and take it home, but she looked at me funny. I had to get special permission to take the photo of it, but I was so excited about that. I think it is great that there are so many stores, and it is not just a store, but they are very popular and frequented diamond stores, I think Mappins and People's. They are branding and selling diamonds mined, cut and polished in the Northwest Territories. I appreciate that this is a joint venture between the mining industry, the government and the secondary diamond industry, I believe. That is something that is really good, but I would like to know the breakdown of this idea in terms of contribution, because I understand the private industry is putting a lot of money into that. I don't know that for sure, so I would like to know what percentage of that, like what is the total budget for that and how much money are we bringing to that, or what is the percentage that we are getting involved in? I would also like to know if this campaign has resulted in any stars coming up. I would like to know when Brad Pitt is coming to the Northwest Territories. Thank you.

Thank you, Ms. Lee. Mr. Bell.

Mr. Chair, I will certainly call Brad this afternoon when I leave here and ask him if he is planning on making a trip. There are a couple of questions there, Mr. Chair. First, on agreements that we have with the mine, socio-economic agreements and the evolution of those agreements. One of the things that we would acknowledge is that, as we move forward with this, we are getting better at it. I think the agreements are getting tighter and more contractual as we continue on. I should clear up some of the confusion. If I have given the impression that there is nothing in writing between the mines and the factories, that is not at all the case. There are agreements between the mines and the factories. We know, generally, that they speak to the kind of assortment or allotment that the factory will receive. There is a sample that is set out that the mine tries to provide as close an allocation to that sample as possible. There is also an agreement on pricing, but those are confidential. We know generally what is in them, but we are not privy to those agreements.

Separate and apart from that, we have the commitments and the agreements, the exchange of letters or MOUs, between the GNWT and the mine. So as I have indicated, as it relates to BHP, we did the socio-economic agreement, and separate and apart from that was this public pronouncement and exchange of letters between the two parties, GNWT and BHP, that speaks to the provision of rough.

We move next to the Diavik agreement. We have something more formal there. We have a memorandum of understanding between the GNWT and Diavik and then we have, as well, an exchange of letters.

Keep going and we are now talking about De Beers and their next two mines. We have done the socio-economic agreement with De Beers as it pertains to Snap Lake and that mine. That agreement and parts of that agreement that speak to commitments that were made by De Beers through the regulatory review process are confidential, but the agreement does enshrine those commitments. I can say that in terms of what they committed to through the regulatory process. We think they are getting better. They are getting more contractual in nature, but that really is a separate issue, separate and apart from the agreements that the factories have with the mines themselves.

The Rare in Nature campaign, and this is really where we are focussing our marketing efforts, and this really is the shift in our approach and focus from trying to do marketing in house, trying to create events and develop promotional materials in house with our own staff, and recognizing that we needed people to do this more professionally for a living throughout a cross-section of industries and have more experience in this area. We decided the better approach would be to contract a public relations firm. It wasn't solely at the choice of this government as to who that firm would be. We invited the factories to sit on a group and make a determination around which public relations firm they wanted to use. The firm that they decided they wanted to use is the firm we are using. This campaign has put together a number of partnerships, sponsored a number of events for us. I think of the Jewellery World Expo in Toronto in October, L'Oreal Fashion Week in Toronto, the Rare in Nature campaign, involved in that, Los Angeles launch with the Canadian Tourism Commission in November. I think members are aware of the Diana Krall Christmas album, Diamond Sweepstake, over the Christmas period, the sponsorship of the free skating rink, Bryant Park in New York City, and then the Golden Globe Awards. So in a short few months, we have had a number of, we think, very high-profile partnerships. We are very hopeful that this will translate into improved sales for our diamonds and help promote the local brands.

As far as how that money gets there and what the budget is, I think Members know that there are certificates that come with these diamonds and the factories pay a certain charge for a certificate. It is $15. Nine dollars goes toward maintaining the database and we have a private outfit doing that for us. The folks who provide the gem print also maintain the database. Six dollars is put back into a special purpose fund for marketing. Our projections this fiscal year are that will be in the neighbourhood of $200,000 available for promotional and marketing activities through this special purpose fund. Thank you.

Thank you, Mr. Bell. 11-9, activity summary, energy mines and petroleum resources, operations expenditure summary, $8.743 million. Are there any questions? Mr. McLeod.

Thank you, Mr. Chair. Before I spoke to the sub-office that was going to be in Inuvik with the two positions, as many Members know, I have spoken to this issue a number of times. I have spoken to my disagreement with Inuvik not having the bulk of the

pipeline positions. I have a few questions I would like to ask the Minister. Calling it a sub-office, I would like to know where it is a sub-office of.

In the travel budget for last year and the revised estimate with $590,000 and the main estimates was $490,000, that is a $100,000 increase. Like I said before, I am hoping the department has a large travel budget because they are going to be spending a lot of time in Inuvik. I noticed this year we have a budget of $487,000. I would be interested to know what the revised estimates will come in at next year. That would be another one of my questions.

I see a lot of positions and a lot of money going into Yellowknife and Hay River. With Inuvik being the centre of this whole oil and gas industry, the anchor fields and everything, it just seems that they got the wrong end of the stick. I see we approved a supp last year for $610,000, $500,000 for expertise to participate in National Energy Board hearings. I would think that we would have some of this expertise in house. I see another $60,000 for Mackenzie Valley pipeline office communication costs; $60,000. I am assuming that is to make phone calls and faxes and that back and forth with Inuvik. I really have a strong disagreement with how the government decides where they are going to put the offices. We should put a diamond office in Tsiigehtchic. It may not make sense to have a sub-office in Yellowknife, but a lot of the decisions that I have been seeing don't make very much sense to me. There were a couple of questions there.

Again, I have to go on the record and say how unhappy I am. I know a lot of the leadership in the Beaufort-Delta is also quite unhappy that, being in the heart of the oil and gas industry in the Beaufort-Delta, we have, right now, one position and we are going to get two, but we are just going to be a sub-office. I would like the Minister to explain some of the rationale behind all of this and hopefully assure me that somewhere in the future we can get more positions. There are quite a few positions here in Yellowknife. I think we should be able to transfer some of these positions and not just keep creating, creating and creating. We create too many positions. I see we lost seven positions because of the human resource amalgamation, but it didn't change the overall active positions at all. I think it even shows an increase of seven, if I am not mistaken. There are a few questions there and some comments for Minister Bell. Thank you, Mr. Chair.

Thank you, Mr. McLeod. Mr. Bell.

Thank you, Mr. Chair. I thank the Member for that input and I am well aware of the region's concerns over the past while. Obviously, we had a difficult choice to make in setting up the Mackenzie Valley pipeline office which is specific to the project, lots of interest in Norman Wells and Fort Simpson, we did make a decision for a number of reasons based on to have that located in Hay River. I know we have been through that. I know the Member disagrees with that, but I would say that there is oil and gas activity all across the NWT likely to be as we move forward up and down the valley. We recognize that the Inuvik area is going to be heavily impacted and really is the epicentre of this pipeline project with the anchor fields.

The hundred TCF ultimate potential in Canada's North I think is spread across the North. But the Member is right; we have recognized that there is going to be a need. We need positions in the Inuvik area. These are not regional positions. I want to really emphasize that. These are territorial positions despite the fact that they are located in Inuvik. They will have the responsibility to deal with the central Mackenzie area. They will be in the Sahtu. They will be in the Deh Cho. They are going to have to work in those regions. This is not a specific regional Inuvik only sub-office. It is a sub-office of the mineral oil and gas division that we have.

Across the North, we have about 17 positions that are spread throughout the NWT that deal with oil and gas. I know this is a question that the Member has had. We have the positions in Hay River related to the MVPO. We also have regional petroleum advisors in Inuvik, Norman Wells, Fort Simpson and Hay River. We have the new additional positions we are creating in Inuvik. We have several positions in Yellowknife, as well. We have an oil and gas economist. We have a petroleum geologist. We have a pipeline regulator specialist who is working on our NEB filing and helping us with those submissions. So there are some specialized positions mostly related to the project. As we move forward with more general oil and gas positions for the territory, you are going to see them located in other areas outside of Yellowknife. Thank you, Mr. Chair.

Thank you, Mr. Bell. Mr. McLeod. Thank you, Mr. McLeod. Next I have Mr. Yakeleya.

Thank you, Mr. Chair. I have two questions for the Minister. One is on industry initiatives. Just on the opening comments I had to the Minister in terms of legislation for some type of socio-economic agreement that would give them more strength and protection for these agreements that are put in place, I will ask the Minister if he has had some discussions as to these agreements. Does he see any form of legislation, or does he feel they are strong enough to hold their weight of water in terms of ensuring that these socio-economic agreements would be honoured and filled by the parties that are signatures to them? Thank you.

Thank you, Mr. Yakeleya. Mr. Bell.

Thank you, Mr. Chair. We have kicked off some work on a socio-economic policy framework. We have to better understand, as a government, just even, for starters, when we try to negotiate a socio-economic agreement and when we don't. You can think of oil and gas activity around the North or other industrial activity, and there isn't any sort of policy framework that guides us into the negotiation of these agreements. We have relied on the regulatory process and recommendations made through the regulatory review that we negotiate a socio-economic agreement. In terms of the strength, I think that the strength that these agreements have really flows from that regulatory process and the permits that are issued on the basis of the company's commitments that they make in that process. We think there are sufficient teeth to the regulatory process, but we want to talk about this policy framework, how we are guided, when we enter into these agreements and what these agreements should look like.

The Member, in his opening comments, talked about monitoring. That is something that we think is very

important. That is something that we have been looking to put into agreements. There is monitoring agreed upon in the Diavik SEA. There is in the De Beers SEA. We are looking for that with the Mackenzie Producers Group socio-economic agreement. As we move forward, monitoring is important. We are trying to strengthen these agreements and make them more and more contractual. You can see the difference between the BHP agreement, the De Beers agreement, and the Imperial agreement in terms of how much more contractual we are attempting to get. Thank you.