Yes, I do, Mr. Chair.

Thank you, Mr. Miltenberger. Does the committee agree?

Sergeant-at-Arms, please escort in the witnesses.

Mr. Miltenberger, may I have you introduce the witnesses.

Thank you, Mr. Chairman. I have with me Ms. Margaret Melhorn, the deputy minister of Finance and FMB; Mr. Michael Aumond, deputy minister of Public Works and Services; and Mr. Russ Neudorf, deputy minister of Transportation.

Thank you, Minister. We are now ready for general comments. Mr. Abernethy.

Thank you, Mr. Chair. I would like to thank the Minister for coming in today and his staff as well. I will be brief.

Basically, I’m glad that the review has been conducted into the capital process. I’m optimistic that it’s going to be a better way to move forward in the future. I think doing the capital now as opposed to later, after Christmas, tends to make a significant amount of sense. It will give us an opportunity to get ahead a little bit this time.

I’d just like to thank you guys for doing the work and coming forward with this plan. I think it’s a good plan. I am cautious though, obviously. I would suggest that it would be valuable for us to put some sort of not implementation but review process into this whole capital plan — not a review of the capital per se but a review of how we’re proceeding with capital in the future.

I know this is the first time we have done it this way. Once again, I’m optimistic that it’s a good way to go, but I would like to see the Department of Finance put in some sort of mechanism so we can monitor the effectiveness of this and ensure that it is attaining the results we hope it will.

So like I said — I’ll be incredibly brief — I think it’s good. I think you guys have done a really great job. I’m looking forward to moving forward. I’ll discuss the detail when we get into the detail, but if the department could commit to ensuring that we have some sort of evaluation framework in place, that would be fantastic.

Thank you, Mr. Abernethy. Was there a question you want responded to in that?

General comments, but obviously I’m looking for them to commit to putting in some sort of evaluation framework.

Thank you, Mr. Abernethy. Minister.

Thank you, Mr. Chairman. There’s the broader work on the capital planning process. The first significant step is being carried out through the Cabinet Subcommittee for Infrastructure, working through and with the Refocusing Government Strategic Initiative Committee. Through that process we’ll commit, as we bring forward the whole package, that we have the appropriate checks and balances and that accountability is built in so that whatever we do, in the final analysis, is set up to have the proper support and set-up to succeed.

Thank you, Mr. Miltenberger. Mr. Krutko.

Thank you, Mr. Chair. I for one have questions in regard to this process as to how capital has been approved. Yes, we’re into our second year. We’ve concluded one year in regard to the term of this 16th Assembly, so we have only have

three years left.

As anybody knows, as long as I’ve been here, if we don’t get anything in capital in two years, it isn’t going to see the light of day until the next election. As a Member who represents small communities and small community infrastructure, there are issues that we’ve been harping about for years and

that we fought to get into the capital planning process. To change the capital process in midstream and implement new initiatives that were never part of capital, I find that very unfair to those Members who have been working on issues and to the small communities.

You look at the capital as it’s laid out. Capital has a very important role in developing our social and economic ability in a lot of our communities by way of job creation, business opportunities, employment opportunities and bringing down the social debt this government has by way of income support payments and other payments we make.

I think it’s important, too, that we realize we can’t continue to invent systems for new initiatives to pop up on the books that basically were never there, yet forget that the whole reason we are here is to ensure we do find a system that’s fair to everyone, not just to any particular department or departments but to communities and community infrastructure.

I spoke in this House earlier this week in regard to the over 30 year old facility in Aklavik, the Joe Greenland Centre. All of them were looking at the report that I finally got my hands on. They only spent $200,000 on that facility, and it’s over 30 years old. There are some major problems with that facility in regard to electrical code violations. That facility is not up to code because of it being as old as it is without proper maintenance

I’m talking about motions passed in this house in regard to Members putting forward motions trying to get projects in place, regardless if it’s a school or a road to access gravel, and also projects that will go a long way to improving the quality of life in communities. Previously they had swimming pools that were part of the budget process where few communities would be able to take actions.

Two years ago we basically had a fund in regard to community capacity funding to allow communities to identify projects they’d like to put on the books, but because of the responsibilities we have — and the same in regard to community infrastructure.

We talk about water treatment plants. There was a major study that took place in the community I represent, in Aklavik, in regard to the health issues — the health of the people of the Aklavik in regard to the potential impacts to health from H. pylori that has been detected in several residents. Again, there’s a direct correlation between that and the health of the community and the water treatment facility that they have in the community.

Yet again we have to wait till 2010 for this to become a reality. I think it is important that this might be a new initiative that’s been put forward. I know it was tried in the 12th Assembly, and it lasted

only one to two years. Basically, they went back to the old system. My question is: why did they do

that? Here we are again trying something definitely….

My big beefwith this process is that it was all done in ministerial committees that have been established by Cabinet, with no real involvement from this side of the House in regard to those capital items that are now being put in front of us.

We’ve got a business planning process in regard to every committee and every department. You go through it clause by clause, line by line and identify those items. Next, beside the document you were looking at, was usually a 10, 15 or 20 year plan, so you could see where these items fit into the plan. You knew they were going to show up eventually and that we stuck to a plan. Right now, from what I can see, there is no plan.

I think it’s important to realize that we as government have some challenges, yes. We’re building $20 million office buildings for the comfort of a few departments, and there was a proposal put forward for $10 million to build the same facility. I have a big problem with that, especially in regard to the whole area of cuts and layoffs.

We continue to go full speed ahead. It depends who gets to the front of the line, gets their capital project into the books and just gets on with it without realizing that there are also political and social impacts that have taken place throughout the Northwest Territories in regard to what we are doing and where we are going.

Again, in regard to Capital Estimates they’re under new initiatives. Of the new items, which are basically coming forward in 2009–2010, a large number are new initiatives. I’m using special warrants. We were told earlier on, back in February when we passed the interim budget, that special warrants were only going to be used for emergency type items, yet we’re seeing items pop up that aren’t of special warrant status.

The other issue I had questions about was in regard to the Financial Administration Act. There were a lot of battles fought in this House in the 13th Assembly and the14th Assembly in regard to capital

items. They’d either shown up on the books out of thin air or basically were moved from one Member’s riding into a different person’s riding with no consultation with Members. That was basically added to the Financial Administration Act to prevent these types of things from happening.

Those are the types of concerns I have. I question a lot of these items in front of us because of experience. I’ve seen over the years in this House how people have influence over the budgetary process, for ministerial committees, through departmental priorities. We tell them to cut in one area; they find ways of inventing projects through

processes that are new, untried or unknown because of not having done it before.

I’d like it to be possible for us to see some sort of a process of accountability, transparency, actually seeing where these capital projects go in light of particular communities and particular ridings. I’d like to see how many projects are in any particular riding and how many projects are in a particular community to really reflect on exact distribution of wealth — where that distribution is being expanded and exactly what the benefit is to the territory as a whole versus one riding, one region or one community. I think it’s important that we take a close look at that.

In regard to the issue that the Minister touched on about technical services, there was a request for proposal a couple of years ago in regard to telecommunication and cellphone service in all our communities in the Northwest Territories. There was that request for proposal put out there. NorthwesTel did the same thing in partnership with an aboriginal company.

I’m just wondering: exactly when are we also going to look at improving technical services throughout the Northwest Territories, not simply for government purposes but also for the residents in the Northwest Territories? Maybe that is more in line with the question I would direct at the Minister in regard to what’s happened to that proposal. What’s the status of it and, more importantly, where are we going?

In closing, as I stated in my opening comments, if you don’t get your items in this budget, this cycle, you’re basically out of luck. They won’t have seen the light of day. At the end of the 16th Assembly you

can talk about it in the next election, because you aren’t going to get it.

Thank you, Mr. Krutko. Mr. Miltenberger.

Thank you, Mr. Chairman. Clearly, there are more needs than we have resources for, so we’re always in the business of making choices.

The majority of the capital items or projects brought forward were already on the table from last year. There were some new ones with Transportation and with some strategic initiatives because of new funding and such. We have shared information with a committee that sorted all the capital projects by constituency so everybody would have an idea of what that looks like.

One of the changes we are trying to deal with, of course, is the issue of carry-overs. Also was the fact that we were approving more and more projects that we weren’t completing. We needed to try to change the cycle and come up with ways to

get ahead of that process so we didn’t have so much money tied up on projects we weren’t completing.

We also shared the 15 year plan with committee, I do believe. As we move forward with the work of the infrastructure committee, they’ll lay out all the steps and suggested improvements to the capital planning process. We do look forward to feedback from the Members in terms of what’s being brought forward, recognizing that there is a need, as I indicated in my statement, to get things done.

Our money was being eaten up by inflation, and I know the 12th Assembly, in fact, had this process.

The 13th came in, and we changed that process,

because we wanted to get the budgets passed.

One of the other big concerns at the time was that the overall budget for the government was often not getting passed until well into the fall, meaning interim appropriations and a lot of other issues around that. Clearly, the capital concerns have reached the point where we have had to reconsider and look at what is the most natural and effective way to deliver capital. That is to try to have the projects ready and the equipment and material on the ground so that you are ready when spring comes to start work.

We look forward to feedback from the community as we move forward with the rest of the work that is being done by the infrastructure committee.

Thank you, Mr. Miltenberger. Moving on, Ms. Bisaro.

Thank you, Mr. Chair. I have a few comments in terms of the process and a lot of questions. We’ll save those for later, but some general comments.

I think the work that is being done by the committee that was undertaking the review of the capital planning process has been very good work. I felt that it was well thought out. They made considered and appropriate recommendations and suggestions for improvement and for changes. I think that as a first go-round this new process has a good chance of success, I guess, for lack of a better way of putting it. I support the process and the schedule, and I look forward to the positive results that hopefully will come out of it.

I do agree with Mr. Abernethy, who spoke earlier, about an evaluation. I think there needs to be some sort of evaluation of this particular process. Whether or not we can make a judgment one year from now remains to be seen, but I think we ought to specify that in a year from now, we will look at the success or failure of certain parts of this particular process. It is intended to reduce carry-overs, and we will have to see whether or not that is put into effect. It is supposed to result in better

tender results. We will have to see whether or not that is something that is going to come true. I think I heard the Minister commit to doing an evaluation. I would like to add my voice to that particular concern.

The Minister mentioned that we received an allocation of projects by constituency, by riding, by community. I think there is some indication, in looking at it, that there is an unbalanced allocation of capital. There are a couple of communities that have little to no capital projects in this next year, and there are certainly some projects that we saw in the Capital Plan for ’08–09 that are no longer in the Capital Plan for ’09–10, and that’s a concern. I understand that things were evaluated. Some were dropped; some were added.

My concern is this. Although we were given a great deal of material which substantiated each individual project, I never felt that I was given justification as to why project A was deleted and project B was instituted in its stead. So we lost one and gained one. I understand that we can always have input into which projects are going to be included and which are going to be dropped, but it might be of more benefit to Members if, in discussion with the Minister in trying to understand next year’s capital budget, we get a better justification of why one project is deleted and another one is inserted.

I did want to say the Minister indicated that there is going to be an emphasis on energy initiatives, and I do agree with that emphasis. I think what is being suggested is good. I think we are moving in the right direction as we move towards more provisioning of hydro power as opposed to the diesel that we are using now. So I would like to just indicate my support for that.

We have already done this, but the one time reduction of carry-overs I think was a good thing. If we can get to a carry-over dollar value that is indicative of what our real carry-over is, I think that is far better. I believe we are into making things as close to the truth as they can be and as rational as we can be.

In terms of the change to the schedule and the timing of the capital process it has been indicated to us, and I agree with this belief, that we need a change in the Financial Administration Act. I would encourage the government to go forward with the changes to that act as soon as possible. I don’t see any value in approving our capital budget in the fall but not allowing the money to be spent until April of the next year. The only way this system is going to work is if money can be expended earlier on so that we can enter into contracts between the fall and the next fiscal year.

I appreciate that this budget shows a fairly large emphasis on deferred maintenance. It’s an area to

me that this government has put a focus on, and I think it’s something that is much needed. We have a huge backlog in deferred maintenance, and that we’re starting to put an emphasis on it and put some money into it is a good thing.

The only other thing that I wanted to say is that we did not get information on the expenditures or the Infrastructure Acquisition Plan for the NWT Housing Corporation. I appreciate that with this change in timing the Minister wasn’t able to provide that to us at this time in the year. We’re advised in future years that, yes, we will get that information. I would just like to mention that I certainly hope that is the case. I think the Housing Corporation infrastructure should come through with all the other infrastructure plans for the whole of the government for the next fiscal year.

With that, I look forward to going into detail, and I will have some questions at that time. That is the end of my comments, Mr. Chairman.

Thank you, Ms. Bisaro. Mr. Miltenberger.

Thank you, Mr. Chairman. Just to reaffirm, the issue of the evaluation process will be dealt with as we come forward with a full package of recommended changes that are going to be brought forward by the infrastructure committee.

The issue of equity among communities and regions is, of course, one of concern. We want to ensure that we are trying to meet the needs in a fair way. I would like to point out that we do have a $28 million infrastructure agreement and contribution to the communities that’s done on a base plus formula. It now gives communities a significant amount of money that they’ve never had access to before. That was put in place to help them address some of the needs that previously they had a hard time getting on the list.

We as well, to confirm, will be bringing forward the changes to the Financial Administration Act so that they’re ready and in place in time for the next budget cycle for the capital process.

Housing will be part of the process so that it’s all done at the front end, even though housing is now currently dealt with through agreements and through the O&M side. It will be brought forward, because it is really capital, so it’s all on the table through this process.

Just one quick follow-up. I do appreciate that communities do have access to a fairly large amount of dollars for projects on their own, but I was referencing more projects which are territorial in nature, such as airport projects and specifically the relocation of the Trout Lake Airport,

which seems to have dropped off the horizon in total.

Thank you, Ms. Bisaro. I’ll take that as a comment. No question. Moving on, Mrs. Groenewegen.

Thank you, Mr. Chairman. First to the Minister’s opening remarks. Interest in large capital projects has shifted to the mining sector, which has reduced our influence in the construction market, and inflation has eaten away at our buying power. I think this is a classic case of throwing our hands up and not trying to think of different ways to do things to make our capital dollars go further.

I’d like to see proof, too, that capital project interests have shifted to the mining sector. You know, that’s an easy thing to say. Where is the proof? I’d like to know how much various contractors in the NWT are providing infrastructure to the private sector versus some kind of a graph that shows some of the projects that have been undertaken in the public sector. I mean, it’s fine to say that and it’s fine to talk about inflation. Certainly, there has always been some degree of inflation, but I think we are rolling over too easy on the cost of some of these things.

Not all of them are competitive processes, the Inuvik school as an example. We’ll get into detail later under Education, Culture and Employment and negotiate a contract. Why? Of course, we have a heated construction market south of us in Alberta, but there has got to be a way for this government to continue to encourage competitive processes. If you can’t get companies to take on full contracts for the whole process, then piece it up. Divide it up. Contract it out.

We have so many professionals who work in the department who are engineers. They have a lot of in house capacity, yet we seem like we contract everything out to do with, well, everything

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everything from consulting on what a capital project should look like to what kinds of programs should go in the project. It seems like we contract that out. We have engineers, supervising engineers, with PWS folks.

Why do you hire a project manager with all the credentials of the person you’re going to contract the service to on a capital project? I hope that makes sense. You have people with the same education and experience equivalency that you’re turning around and getting them to supervise the work. I don’t quite understand. I mean, if you want to talk about stretching our capital dollars further….

Anyway, the bottom line is that I think we’re paying too much for our capital projects. I believe in consultation on what these things should look like and what the program’s going to be and the

activities that will take place in them, but I think we’re going there too much with a blank cheque and just letting people dream big and dream wild about this. They’re ending up with running up capital projects that are just too expensive. I can’t categorically prove this to you, but people obtain more for less in the private sector than we do as a government. We have to ask ourselves why. Why is that?

When it comes to the prioritizing what capital will go ahead and what will not, I do think there is tremendous inequity, unfairness, in the way that’s done. I don’t think it’s necessary to put almost the entire year’s capital budget in one community and completely ignore the needs in others. I don’t think there’s equity between large communities and small communities.

I don’t know what the magic formula is to getting capital in your community or in your riding. Obviously, I haven’t stumbled onto that, because most of the big projects in my community have been pushed back — the hospital and the school. I’d hate to hazard a guess that there’s a different table you should be sitting at. At the table I’m sitting at and at this table, I’m always promoting and encouraging and asking and trying to, with all due respect and diplomacy, draw attention to the needs of my community, but then we see projects going ahead like the ones that will be contained. But we’ll get into that in the details.

I don’t know why we as a government also need the Cadillac version of everything. I would like to know what they’re paying for schools in southern Canada

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big schools, fancy schools. I’d like to know how

that compares with what we’re getting on a per square foot basis. I think we’re paying too much.

Another thing that contributes to our costs is the amount that we spend on what we call the soft costs, the engineering and the architectural. Again, I think we walked up to some of these folks with blank cheques in our hand, and the sky is the limit. We keep talking about the competing interest for capital. If that’s truly the case, then we need to look at every area that we can economize.

Going forward after capital projects are built, it would be really nice in the design and planning of these if we would take some of the ongoing O&M costs into consideration too. I haven’t been fully convinced that the whole energy conservation thing has actually hit home with some of these projects yet. I think we’ve seen a tremendous increase in the cost of utilities and will continue to. There must be ways of building more energy efficiencies into these buildings. I’d be very interested in hearing from the Minister what kind of emphasis is put on that when all of this consultation and program review goes into these projects.

Even when you apply a factor of costs for remote and rural locations, all those kinds of things, I still think we are paying an extraordinary amount for our capital projects here in the North. I again would be interested in seeing, on a square foot basis, what kind of a rate we’re paying compared to similar infrastructure that is built in southern Canada.

I think the process has improved. I do support this new timing. I think there is still a lot we could gain by consulting with people in the industry. We’ve been talking about that, and I understand that maybe there’s a paper or a report in the works right now with the NWT Construction Association. I think we need to view them as our partners in this discussion and lay it on the table that we have a lot of demands on our capital, a lot of needs. We need to work with them. Northern industry wants to see benefit from the money that our government spends. We want northern preference. I think we need to talk to them about what we can do as a government to get as much as we can for the dollars we have.

I think they are willing to talk to us about that. I’ll be very interested in hearing what they have to say. It has been on our agenda for a long time, to meet with those folks. That is about all I have to say right now in the general comments. Thank you, Mr. Chairman.

Thank you, Mrs. Groenewegen. Minister.

Thank you, Mr. Chairman. The work of the infrastructure subcommittee that is looking at the whole capital planning process is, in fact, trying to identify and come to grips with recommendations to deal with issues that the Member has raised: the concern about overdesign, the cost factors, the issue of standardized designs, the moving towards bundling of projects so that we can in fact be more efficient.

For us the evidence over the years has been clear in terms of the cost, the number of carry-overs, the number of tenders where there was one bid or no bids or bids that are not even close in terms of the difference between the cost of the estimate versus what was being offered. So there are a whole number of things that we agree have to be looked at and that we’re trying to come to grips with, which is why we started this process. There was a general concern that we could restructure government processes to be more efficient, effective and economical.

We have no design architects, for example, on staff, so that’s one thing where we do contract. Many of the project people, given the very many numbers of projects, have to be prepared to supervise multiple projects, often spread out over a fairly wide area. As well, we are working to get

better and better at our conservation standards for northern buildings, for our institutional buildings. We see the Greenstone Building that the federal government has built as a model for efficiency that we’d like to be able to try to reach. And we are continuing to work with and consult with the northern contractors, the architects, the construction society. We once again are looking forward to coming back to committee with the completed work of the infrastructure subcommittee that will hopefully address these issues in greater detail. Thank you.