Thank you, Mr. Speaker. The Government of the Northwest Territories is facing a difficult challenge in providing the programs and services residents require, given the fiscal resources available. Delivering and maintaining the infrastructure from which to deliver these programs and services also faces the same challenges.
The Western Canadian economy, and in particular Alberta, is heated. The Northwest Territories competes in this economy and faces the same challenges as other governments and the private sector in delivering infrastructure projects on time and on budget.
Decisions about capital investments affect the availability and quality of government services. Capital investments are the physical foundation of government service delivery that includes transportation infrastructure, water and sewer systems, and buildings that house government services such as courts, parks and recreation, health, social services and other important community programs. The quality of this infrastructure has implications for health, safety and quality of life. The government’s physical infrastructure is what permits economic activity to efficiently take place. It allows people and goods to move, provides reliable water, and it’s where children are educated and elders are cared for. In many cases it is a determining factor that makes
NWT communities a place where people choose to live.
The fiscal reality, Mr.
Speaker, is that the
government’s infrastructure needs exceed by a wide margin our financial ability to address them. Therefore, we need to explore broad and innovative approaches to infrastructure planning, acquisition, usage and maintenance.
This approach needs to take into account funding limits as well as changing priorities, demographics and service initiatives. The Government of the Northwest Territories needs to find ways to optimize opportunities for shared and flexible approaches to infrastructure management and should seek to optimize opportunities for leveraging infrastructure funding, creative partnerships and alternative means of accessing infrastructure for programs and service delivery.
Mr. Speaker, this Assembly has also recognized the importance of providing affordable housing in our communities. The Northwest Territories Housing Corporation will continue to be a participant in our capital-planning process. However, we must ensure that housing remains a top infrastructure priority while recognizing the differences between how we build government facilities and how we deliver housing. Therefore, we will continue to allocate and budget our housing delivery using a parallel process that recognizes the need for different planning parameters for housing but does not lose sight of the value and economic benefits that result from a coordinated planning and delivery process.
In recognizing these challenges, Mr. Speaker, the Premier established the Ministerial Subcommittee for Infrastructure to review, advise and provide recommendations on how best to plan for, acquire and deliver infrastructure required for GNWT programs and services.
Based on the analysis of current GNWT practices, the subcommittee developed a list of recommendations for improving the GNWT’s capital-planning and delivery processes. These recommendations were presented for consideration in detail to the Standing Committee on Priorities and Planning and were also considered and
approved by Cabinet and FMB with a view to improving the planning, acquisition and delivery of infrastructure projects to help control costs and take preventative measures to avoid higher future costs.
Some of the more important changes we’ll be implementing are: more rigour and discipline will be imposed on the capital-planning process by developing large building projects to a class C or schematic design stage and subjecting these projects to a peer review to ensure that the proposed infrastructure solution appropriately matches the defined program/service needs. Projects must advance to the class C stage and have undergone a peer review prior to proceeding to the consultation stage.
PWS, in consultation with departments, will develop standardized designs for like buildings — examples are schools, health centres, parks infrastructure — and these standardized designs, once developed, will be used for all future infrastructure projects.
Departments will attend to their deferred maintenance projects as a priority over new or incremental infrastructure projects.
Obtaining bids from contractors through public tender and negotiations requires careful scheduling, and tenders must be scheduled to allow enough time for contractors to purchase, fabricate and expedite materials. Winter road and barge schedules present additional constraints. Problems with schedules can increase the risks to the contractor and to the Government of the Northwest Territories and add costs to the project. Tendering in April and May for summer construction is not ideal as contractors are already committed to other projects. Therefore, we’ll ensure that the appropriate consultation with standing committees takes place with a view to obtaining approval for the Legislative Assembly to consider the infrastructure acquisition plan along with the required budget allocations in the fall session.
Approval of the capital-planning process well in advance of the beginning of the fiscal year will allow for opportunities for better schedules and cost savings through the ordering of materials earlier and the logistical planning for transportation being confirmed earlier in the season.
A value analysis will be performed on every major project. These reviews will provide a mechanism for audit and accountability to ensure that projects have met the conditions of their approval. It is also important to ensure that lessons learned are incorporated into the capital-planning and project delivery process.
The Business Incentive Policy was established in 1984 to provide a level playing field for NWT-owned businesses to compete with businesses from southern Canada on GNWT contracts. At that time
the NWT economy was still in the developmental stages. The economy was not mature or diverse, and GNWT procurement and contracting — construction and leasing in particular — were the major underpinning of the NWT economy. The current Business Incentive Policy, or the BIP, provides a preference to NWT-owned firms by providing a bidding advantage of 15 per cent for northern content and 5 per cent for local content when these businesses bid on GNWT and community government projects.
Some 24 years later, in 2008, the maturity and scope of the NWT economy have vastly changed. In the mid-1990s diamond mining, oil and gas exploration, and related industrial services became the dominant players in the NWT economy and offer steady and secure income to many contractors. The reality is that there is more interest in mining and oil and gas construction and maintenance contracts than there is in GNWT contracts, and as a result, the GNWT’s influence over the economy through the use of construction contracts is minimal.
In addition to the diversification and maturation of the NWT economy, the Western Canadian economy, in particular Alberta, is booming. This has resulted in major construction contractors either leaving the NWT altogether or becoming more interested in seeking contracts in Alberta rather than in the NWT. Outside of Yellowknife only one major contractor has consistently bid on large GNWT/community government building projects. Coupled with the annual cost of inflation, estimated at 20 per cent per annum, this lack of competition or interest in GNWT construction contracts is making it extremely difficult to complete projects on time and on budget.
Mr.
Speaker, requiring community government
compliance with BIP is not consistent with the spirit and intent of the New Deal for NWT Community Governments, the intent of which is to recognize community government authority and autonomy and provide communities with the tools to make decisions and implement them effectively.
The solution to the above problem is to create more competition for GNWT/community government construction projects. In order to facilitate competition, one needs to create more interest in these contracts. In order to generate the required interest, we need to consider removing the application of the BIP from these projects and contracts.
The subcommittee has recommended eliminating the application of the BIP from the GNWT and community government infrastructure projects. Cabinet has requested my colleague the Hon. Robert McLeod, Minister of Industry, Tourism
and Investment, to develop options on how best to implement this recommendation.
In conclusion, Mr. Speaker, the subcommittee will develop an implementation plan for this revised approach to the planning, acquiring and delivering infrastructure, and I will be seeking an opportunity to advise the Standing Committee on Economic Development and Infrastructure of this revised approach and how it will be implemented.
Thank you, Mr. Speaker.