Does the committee agree that Bill 11 is now ready for third reading?

Bill 11, An Act to Amend the Legislative

Assembly and Executive Council Act, approved for third reading.

Thank you, Mr. McLeod. Sergeant-at-Arms, could you escort the witness out, please.

The next item we need to deal with is Bill 9, which is Supplementary Appropriation Act, No. 4, 2007–2008. At this time I’d like to ask the Premier if he’d like to make some general comments to introduce the bill.

Thank you, Mr. Chairman. Supplementary Appropriation Act, No. 4, 2007–2008, requests authority for additional appropriations of $28.205 million for operational expenditures for the 2007–2008 fiscal year.

There are two items in this request:

1) $10.9 million for the Department of Municipal

and Community Affairs to record a grant-in-kind for the costs associated with infrastructure that has been transferred to community governments. There is no outlay of cash as the funds were expensed in previous fiscal years. The impact on government operations is nil as the department will record an offsetting revenue amount.

2) $17.3 million for the Department of Health and

Social Services to provide contribution funding to fund the projected accumulated operating deficits of Health and Social Services authorities as at March 31, 2008.

That concludes my opening remarks. I am prepared to answer questions Members may have.

At this time I’d like to ask the Minister if he’ll be bringing any witnesses.

Yes, Mr. Chairman.

Does the committee agree that the Minister bring his witnesses?

Sergeant-at-Arms, could you escort the witnesses in.

Mr. Roland, could you introduce your witnesses, please.

Mr. Chairman, to my right I have the secretary to the FMB, Ms.

Kathleen

LeClair, and to my left is Mr. Sandy Kalgutkar, director of budgeting and evaluation.

Thank you, Mr. Roland. Welcome, witnesses.

General comments in regard to Supplementary Appropriation Act, No. 4, 2007–2008? Detail?

We are on Bill 9, Supplementary Appropriation Act, No. 4, 2007–2008, and also the preamble and the schedule at this time, for which we will move to page 5 of the bill, Municipal and Community Affairs, Operations Expenditures, Regional Operation, not previously authorized: $10.885 million.

Bill 9, Supplementary Appropriation Act, No. 4,

2007–2008, Municipal and Community Affairs, not previously authorized: $10.885 million, approved.

Total Municipal and Community Affairs: $10.885 million, not previously authorized.

Bill 9, Supplementary Appropriation Act, No. 4,

2007–2008, Total Municipal and Community Affairs, not previously authorized: $10.885 million, approved.

Health and Social

Services, Operational Expenditures, Health Services Programming, not previously authorized: $17.32 million. Mrs. Groenewegen.

Thank you, Mr. Chairman. I understand that this allocation is to address the various deficits in the operating budgets of some of the health authorities. Several are in financial deficit; several are not. This is not a new happening. This is something that has been happening with health authorities for a number of years.

In the past there was some level of participation sought from health authorities when they were in deficits to work with the government in terms of a recovery plan. I can think of one time when the health authority was expected to work with the government to come up with 50 per cent of the deficit over a period of time. The problem with that occurs when you get into this level of deficit and then with the forced growth and the continuing pressures on the government to provide seemingly an ever-expanding number of services, pharmaceuticals, competitive wages, salaries and benefits for our human resources component of the health system. There are just so many challenges that I won’t go into naming them all; we know what they are.

If we did seek some kind of participation in the recovery process, I can’t see that doing anything but putting more pressure on the delivery system. The last thing you want to do is do things that would impose hardship on the patients and the clients our services are meant to serve.

I’d like to ask about this. What are we doing to analyze why we are getting into this level of deficit with some health authorities? Some are in good shape, some are breaking even and some have surpluses. What are we doing in terms of analyzing why the situation is occurring? Either we are perhaps underfunding the health authorities, or perhaps it has something to do with the management of the funds we do provide to them. I’d like to know from the Minister what we’re doing to try and address the causes of such a substantive deficit.

The Minister of FMBS, Mr. Roland.

Thank you, Mr. Chairman. The Member is correct on the process, the program that’s in place and the policy we have with authorities. On the side of deficits, the boards are to address the deficits through their annual plan. With surpluses, they are allowed to put 50 per cent into a reserve fund to offset future deficits. We have two health authorities who have deficits at this point.

I want to say for the record that the deficits have started as late as the year 1999. Since ’98–99 a number of boards have been in and out of deficit. The Government of the Northwest Territories in past supplementary appropriation exercises has paid out half of the debt at that point but had health authorities working to come up with a plan to find the rest of that.

When we found that the deficits were going higher, FMBS had become involved with the Department of Health and Social Services and progressed to the point of doing a zero-based exercise. That exercise was initially to take a snapshot view of how the health authorities were spending their dollars. We started with Stanton, and we’ll be going forward to the Beaufort-Delta Health and Social Services Authority as well. From that, we’re hoping to gain a better understanding of how the money was being expensed. Was it an area of underfunding, or was it an area of enhancing program delivery that was beyond the mandate of the Department of Health and Social Services and the authorities?

The Department of Health and Social Services has now taken that information under review and has been working with the authorities on coming up with a plan to deal with the expenditures going forward. FMBS has reviewed this scenario of where the authorities are and felt that to start this process and do a proper review, it would not be, as the Member stated, appropriate to burden the existing arrangement with an old debt that’s been collecting and starting to grow.

I’m wondering what incentive managers of health authorities have to live within their means and stay on budget. This sends a

pretty big message for a deficit of this magnitude to be addressed with a straight bailout, so to speak. What incentive is there, then, for the authorities who have stayed within their budget or very close to it? What incentive is there for them to do that going forward, knowing that we can vote a $17 million budget item to address a deficit?

Mr. Chairman, the surplus and deficit policy allows the boards that are in a surplus situation to hold on to 50 per cent of that surplus. At one point all the money used to be returned to the department. Of course, there are a number of health authorities that are doing okay or holding surpluses. There are a few that are into a deficit, and the two major ones are Stanton and the Beaufort-Delta Health and Social Services Authority.

A serious question we have to address, even going forward, is: what is the expectation? Right now I think a lot of not only authorities but also people of the Northwest Territories feel that health care is an important or crucial element of delivery in the Northwest Territories, to the point where we fund the programs and continue to fund health authorities to keep their operations going.

We’re at the stage now in the Northwest Territories where we can’t afford to let these situations continue to grow. There’s a need to deal with that, and the Department of Health and Social Services has been putting a plan together dealing with the authorities and reviewing it.

Questions we have to ask ourselves in these areas are, for example: Stanton being the territorial facility, if other authorities are unable to provide a service because they’re unable to find the right mix of doctors and nurses in the other facilities, do they send a larger load to the Stanton facility to take care of that? That is something we also have to look into as we proceed with this ongoing work.

This is a really sizeable amount of money, $17 million. I want to know: are there any intermediate steps that would be taken when you’re heading down this path to a $17 million deficit, where at some point somebody might say, “We’re in trouble here” and take some intervention steps to do some analysis along the way as opposed to trying to sort this out afterward, this far into deficit? It just seems like it’s a little too much after the fact. Sometimes with health authority boards there has been a necessity in the past to step into the situation. The Minister will take on a role of appointing a public administrator to deal with situations when things seem like they are going off the rails to the point where the system is under this kind of pressure and there’s this kind of exposure of public funds in public facilities and public programming.

I guess I’m concerned about how far down this path we are right now. Weren’t there some warning signs going off quite a while ago? This total amount came about as quite a surprise to me when we were actually starting to learn of the magnitude of it. I want to know what policies are in place to make some kind of an intervention before things get to this state.

Mr.

Chairman, we work

through the territorial health and social services act, and that lays out the relationship that departments have with the board and how FMBS can become involved in the operations of an authority.

Under the last government, initiatives were taken to bring FMBS to the table. That’s how the zero-based initiative was started: with the involvement of FMBS, the Department of Health and Social Services and the Stanton facility to come up with a program on reviewing its expenditure patterns and looking at how it was carrying on with the management of delivery of that service. That was going to be the model that is used for other authorities that are facing a similar situation.

Now, Members going back in previous supplementary appropriations would be aware that previous actions have been undertaken with the Department of Health and Social Services, coming forward with 50 per cent of the deficit of that fiscal year and having departments or the authorities come up with a plan to recover the deficit from within that year. That has been the exercise undertaken. It has now gone to another level where FMBS has become involved in looking at the collections of the authorities to ensure we are receiving our revenue from providing services to other jurisdictions or the federal government, for example, as well, and the billing system that is in place.

Thanks, Mr.

Minister.

Next on the list I have Mr. Ramsay, and then Mr. Robert McLeod. Mr. Ramsay.

Thank you very much, Mr. Chairman. I just want to follow up on my colleague’s questions. It’s interesting, I guess. I find it hard to believe that we’d be here today facing this $17 million item in a supp, $11.5 million of it for Stanton alone, when it was over two years ago that alarm bells were first rung over the deficits that were accruing at Stanton Territorial Hospital. That was two years ago. It’s nice to see the government finally waking up and wanting to do something about it. But this is not a problem that just happened overnight. It’s a problem that’s been going on for awhile.

As for the previous public administrator I’m not sure if they were asleep at the switch or what was happening. We haven’t addressed the unfunded

positions at that hospital. To be honest with you, I just don’t see a palatable game plan going forward. I know the Minister has hired somebody from Calgary who’s familiar with the hospital. They’re not here on the ground. They’re not out there every day trying to figure out what’s going on at that hospital. To my knowledge they still live in Calgary. It’s only a three-month time frame, so I’m wondering how you can fix what amounts to eight years of neglect in three months. I don’t know exactly how that is going to work.

The Premier talked about it. The Minister of Finance talked about it. We went to a zero-based review, and you know what? As soon as the zero-based review is done, that hospital doesn’t pay their payroll for six and a half months. Maybe it’s ironic with the timing — I’m not quite sure how that works — but they’re into FMBS for $26 million. I’d like to ask the Finance Minister if we could get a breakdown of that $11.5 million and what it went to pay. Is it all for salaries? There’s been some discussion that maybe part of that $26 million that the hospital is into FMBS for is part of that $11 million. I’m not sure, but can somebody please try to help me out with that? I’d like a breakdown of the $11.5 million.

The Minister of FMBS.