Thank you, Mr. Roland. Mr. Ramsay.

Thank you, Madam Chair. From what the Minister is saying, the work was getting done in house. It was being contracted out between 1999 and today. Was that work being done by staff within the Department of Finance? What work was done? Thank you.

Thank you, Mr. Ramsay. Mr. Roland.

Thank you, Madam Chair. When the work wasn't being contracted out, it was being done by our officials, yes. Thank you.

Thank you, Mr. Roland. Mr. Ramsay.

Thank you, Madam Chair. Madam Chair, then I would have to again question why the department wants to rush out and spend half a million dollars developing a new macroeconomic policy division if the work has been getting done for the past seven years? It doesn't make much sense. If you have been getting it done and you have been contracting out what you need

on a go-forward basis, then why spend half a million dollars? Why add all these PYs? Thank you, Madam Chair.

Thank you, Mr. Ramsay. Mr. Roland.

Thank you, Madam Chair. Madam Chair, as I stated and gave out a number of dates and work that was commissioned by the Department of Finance, we also have to look at, since 1999, growth of expenditures and growth overall in the Territories has gone up by 88 percent. The work we have done, for example, the work that was with the Canadian Energy Research Institute was to do with the Mackenzie Valley gas pipeline. As a government, we shouldn't be doing these at a one-off situation and going out to get a contract for one project and then another project. We should have a fairly constant regime in place that would allow us to make policy decisions and fiscal decisions with that work being done on a regular basis. That is why, as it was pointed out, we have been doing it from within, and when required on the bigger projects, going out for contract. It is time now to actually go the next step and put something like this in place. Thank you.

Thank you, Mr. Roland. Mr. Ramsay.

Thank you, Madam Chair. Madam Chair, I am going to have to disagree with the Finance Minister on this. I can't, in good conscience, support spending half a million dollars for work that has already been getting done. That is just my opinion on it. If some of this work needs to get done, again, I look at some of the work that has been done at ITI. Maybe a new position could be in ITI that would look at macroeconomic policy. I don't know. It is just something I just can't believe we are allowing to happen, to be honest with you, Madam Chair. Thank you.

Thank you, Mr. Ramsay. Mr. Roland.

Thank you, Madam Chair. Yes, we will definitely have to disagree on the positioning, as stated. When we look at other jurisdictions and the role of Finance and fiscal policy, macroeconomic policy would fit and does fit within Finance. When we have gone out to do the other work, we have had to pay for it, so it wasn't being done for nothing in previous years. We have had to go out and pay for it. We are at the stage in the development now as the Northwest Territories that we need to be more consistent with what our approach is, not go out on specific issues to try and come up with appropriate fiscal plan and policy that we would adopt. Thank you, Madam Chair.

Thank you, Mr. Roland. Are there any further comments on this page? Activity summary, fiscal policy, operations expenditure summary, $1.213 million. Ms. Lee.

Thank you, Madam Chair. On the fiscal policy, I think I am going to skip over the questions about macroeconomic position because I think I got enough information out of that. I am going to speak to the budget writing and an element in the budget, and go right to page 5 and the conversion of workforce housing.

I don't want to repeat all of the stuff I have said here, and I think it would be much more productive for us to just be less pro and con about this project and look at it as a fiscal or economic project that we need to all pay attention to, because I know that the Minister wants to do good and he would do his due diligence to make sure that we don't leave behind any boondoggles, so I am going to help him along with that. Now that the Minister has put this idea into the budget, what are the next steps and what are the next milestones that would determine the moving along of the project if it does move along? What, if any, dollar commitments were made in that MOA or MOU? The attachment said MOA, but I understand, from talking to other Ministers, that it was an MOU. I understand that it had to do with the confidentiality of the product itself so that you are not talking about a product to other people. When I say that we should be looking at other ideas, I don't mean to take that product idea around and see if other people could do the same thing. That is never my intention of anything. I meant in just talking about looking at other options and if there are other companies that could produce something equally good or better. Unless you ask, how do you know? I think that there still should be due diligence done to see if this is, in fact, the best way to go.

I would like to know what other steps that we need to take and also, the most important thing, I have had a chance to talk to developers and builders. Actually, I have talked to about eight, nine or 10 businesses in town, people who are much more acquainted about this sort of thing. I have talked to financial people, bankers who could do calculations by the millions. For me, as soon as it goes over $10,000 or whatever, I can't do all that math.

I think even the people who are most supportive of this proposal still have questions about the liability issue. There are people who feel that, even if all the details of that project go well as presented, we are talking about D estimate. So you have a lot more details to work out and usually moving from D estimate to A estimate, chances are that you are going to see costs changing and rising. There are lots of unknowns when you are talking about a project this massive. We have cost inflation issues, whether we are building in this project with 2006 dollars and it won't be until 2012 before this gets done. There might be some delay, for whatever reason. It could be weather issues, ice road issues. They may not be able to find the people; the freight costs might go up. There are all sorts of variables that could be beyond the control of anybody. We have seen lots of projects in Yellowknife that went way over cost overrun without any fault of anybody. I understand that the Deh Cho Bridge project...You know, the cost of stuff go up beyond control. I understand that the proposal, as it is presented, really assumes most of the liability. It gives most of the liability if something goes wrong or any unforeseen circumstances to the GNWT. I would like to know if the Minister has done risk liability analysis and how would he make sure that he is comfortable with the level of risk that we are assuming? I understand any project has risks, but there are different kinds of risks, and there are people who are trained to do fiscal risk analysis and such. There are a number of questions there that I would like the Minister to address for me. Thank you, Madam Chair.

Thank you, Ms. Lee. Mr. Roland.

Thank you, Madam Chair. I guess since this was announced or stated in the budget address, it might have some bearing to the process we are in. The MOU, first of all, does not commit us to any funding. It is one of sharing information, so there is no funding tie there. It does lock us down to the fact that we are working with the one company with a design. It started with the Housing Corporation having some preliminary meetings around this proposal, doing some investigation and it was felt, at that point, that it was worthy of some further investigation and work. Then when I became involved in looking at it from the FMBS side, not necessarily from the Finance side, was when we started to look at some of those numbers and look at the risk side of the equation. When I made the presentation in December to Members regarding this, I laid out the pros and cons about this. The risk side is there, as well. We are going to have to make sure we do our due diligence, as the Member stated, to ensure we don't get caught in a situation where we just can't afford this.

There has been a significant amount of work done, more along the lines with the Housing Corporation and the Canada Mortgage Housing Corporation, the CMHC, around the type of product and the compatibility of housing units in the Northwest Territories; for example, the R value of walls, the design, the conversion features, as well the types of furnaces, doing work around the communities, and the transportation. That is why we are only looking at three of the camp locations. There will be other camps, but we are looking at the locations where transportation would be more favourable for us. Indeed, more work needs to be done.

The milestones that need to be reached for this to proceed any further, one would be ultimately having the federal government continue with its support that they had given to us prior to the election. That would be critical. Without that, this project doesn't go. As well, the fact that we need to keep the savings of the final product at a target that we feel is acceptable in selling these units to citizens in the smaller communities. When we look at that and using year old numbers, of course, when you look at the square foot costs that the Housing Corporation was getting for stick-built construction versus this concept, from last year, we were looking at $161 a square foot on traditional northern construction methods, and the Novel concept or the concept we are looking at would be at about $100 a square foot. Of course, this still takes into the fact that CMHC needs to provide the necessary funding to make this work. Ultimately, as well, the pipeline project proceeding. There are discussions going on in the next few days about what involvement the pipeline partners would see in this process. Thank you.

Thank you, Mr. Roland. Ms. Lee.

Thank you, Madam Chair. It was a surprise to some Members on this side when we saw in the public document that an MOU or MOA was signed because I don't think we were aware of it. I would like to ask the Minister if he would be talking to us in advance before...if these milestones were to meet. I don't know when this is all going to happen, but if he got an approval from the federal government...and also I think we should really ask for the federal government...We need to have the federal government coming at the front end. I think the GNWT is assuming way too much risk to assume so much liability and help CMHC...CMHC will be more prone to approve this project having a government back them up, but I think the GNWT is assuming way too much liability even if CMHC approved this. If they go without having the federal government come at the front end with the GNWT because we are contributing less than they are. I just think it should be half and half or as much as the partnership, it is I think the federal government. If at all possible, the Minister should work to have them come in at the front end. I would like to know if the Minister would make a commitment to present the case to us as he meets the milestones, like if he gets approval with the Housing Minister, or get a fine from the producer, and getting an approval from CMHC. Before he writes it into the budget, I think that a project this big, we should have a first go at it. I would really like to know if the Minister will do an independent risk analysis of this project, a liability question. Thank you.

Thank you, Ms. Lee. Mr. Roland.

Thank you, Madam Chair. I would be happy to, along with my colleague from the Housing Corporation, however we would arrange this, to provide information and meet with Members once things start to proceed and we reach different milestones. I would be happy to share that information and sit down with Members as we proceed down this path. Thank you.

Thank you, Mr. Roland. Ms. Lee.

Thank you. Could I get the Minister to commit to getting the federal government to come sit at the front end? I think he needs to negotiate harder to get the federal government come at the front end. It is not physically responsible to undertake this kind of project and this kind of liability if the people with a bigger purse than we do to say that, let them get off the hook and say, you can come in at the back end. I would like to have a strong commitment from him that he would fight for that. Secondly, I would like to know if he could get these new economists and other brainy people in the department to do some risk analysis of this massive project. Thank you.

Thank you, Ms. Lee. Mr. Roland.

Thank you, Madam Chair. Madam Chair, we did put the proposal out to the federal Minister on one with the up front costing of it, as well as option two being at the back end. We would not proceed down this path without a signed commitment from the federal government. At this point, initially at least their stance was that they would come into it as the units would become available. They recognize that it would also mean a higher cost to them by doing that. Ultimately, we will not proceed without a signed commitment from the federal Minister on this. Thank you.