Mr. Speaker, I wish to table the following document, entitled Minister of Transportation’s Annual Report to the Legislative Assembly for 2007 on the Transportation of Dangerous Goods Act (1990). Thank you.

Document 19-16(2), Minister of

Transportation’s Annual Report to the Legislative Assembly for 2007 on the Transportation of Dangerous Goods Act (1990), tabled.

Mr. Speaker, I wish to table the following document, entitled 2006-2007 Annual Report of the Western Northwest Territories Biophysical Study. Thank you.

Document 20-16(2), 2006-2007 Annual Report

of the Western Northwest Territories Biophysical Study, tabled.

In response to Motion 17-15(4), adopted by this House on March 2, 2006, I wish to table the Report of the Auditor General of Canada on the Northwest Territories Housing Corporation Public Housing and Homeownership Programs — February 2008.

Document 21-16(2), Report of the Auditor

General of Canada on the Northwest Territories Housing Corporation Public Housing and Homeownership Programs — February 2008, tabled.

Item 15, notices of motion. Mr. Menicoche.

Mr. Speaker, I give notice that on Monday, February 18, 2008, I will move the following motion: I move, seconded by the honourable Member for Tu Nedhe, that the Legislative Assembly strongly recommends that the responsibility for the administration of social housing be once again placed under the control of the NWT Housing Corporation; and further, in keeping with the concept of centralizing subsidy programs, that responsibility for determining the methodology of calculating social housing subsidies be retained by the Department of Education, Culture and Employment; and furthermore, that this Legislative Assembly recommend that the government provide a response to this motion within 120 days.

Item 16, notices of motion for first reading of bills. Item 17, motions. Item 18, first reading of bills. Item 19, second reading of bills. Item 20, consideration in Committee of the Whole of bills and other matters, Sessional Statement 1-16(2), Minister’s Statement 9-16(2) and Bill 1, with Mr. Krutko in the chair.

I’d call the Committee of the Whole to order. We have Minister’s Statement 1-16(2), Minister’s Statement 9-16(2) and Bill 1, Interim Appropriation Act, 2008-2009. What is the wish of the committee? Mrs. Groenewegen.

Mr. Chairman, the committee today wishes to consider Bill 1, Interim Appropriation Act, 2008-2009. The Minister has provided his opening comments, and we would like to proceed with general comments. Thank you.

Is the committee agreed?

With that, we’ll take a short break and begin with general comments.

The Committee of the Whole took a short

recess.

I’ll call Committee of the Whole back to order.

At this time I’ll ask the Minister if he’d like to bring in witnesses.

Yes, Mr. Chairman.

Sergeant-at-Arms escorted the Minister’s

witnesses into the Chamber.

For the record,

Mr. Roland, could you introduce your witness.

Thank you, Mr. Chairman. Joining me at the witness table is Mr.

Sandy

Kalgutkar, who is the director of Budget Evaluation for the Financial Management Board Secretariat.

Thank you, Mr. Minister. Welcome to your witness.

General comments in regard to the Minister’s opening statement. Mrs. Groenewegen.

Thank you, Mr. Chairman. The report or response to the interim appropriation report was read into the record earlier today, into these proceedings. Just to speak to those issues in a little bit more detail.

This is an unusual budgeting year because of the Territorial election. It throws us off our normal schedule and thus the need for an interim appropriation. I think the interim appropriation from an O&M point of view can be fairly well characterized as a status quo kind of extension of previous fiscal years’ operations.

I think that where we got into more concentrated discussion was around the capital that the government felt it was necessary to incorporate into the interim appropriation. Certainly, the way we are somewhat or even, I should say, extensively affected by things such as our short summer season and that some of our shipping methods in the Northwest Territories have a seasonal aspect to them as well, we were very interested in knowing which capital projects needed to be advanced and brought into an interim appropriation as opposed to an irregular budgeting process. We were able to obtain information from the government as to the rationale for including as much capital in the interim appropriation as was contained in there, so there has been some dialogue back and forth with the government with respect to the capital pieces.

Some of the things that we were concerned about not interfering with were where there was already a contractual arrangement that had been put in place for a certain project and there were obligations to meet under that. We were also obviously concerned about any projects that needed to be advanced in a timely manner because of any safety or code issues. In our capital planning criteria, of course, the protection of people and the protection of assets are very high on that list of priorities. And the other thing that we didn’t want to be ignorant of, I suppose, was the need to pass things in order for materials to be shipped so that things could be built at the most cost-effective time of the year. When you start getting into winter construction and hoarding and heating and all kinds of other costs, it doesn’t take long to add a lot of money onto your capital project. So those are the kinds of things that we were looking for.

Anything that could be deferred we were wanting to defer to a normal process, so we did get information back on those projects. On the individual projects I think Members will have questions and comments, but I would like to thank

the government for doing some extra work for us to help us understand the need to include certain projects in the interim appropriation.

So with that focus on the capital part of the interim appropriation as well, we felt it was necessary to discuss the entire capital planning process and how we go about doing that. We feel a lot of pressure. We have limited money for capital, we have a lot of capital demands on our budget and we want to ensure that the capital planning process is such that we can assure ourselves that we’re getting the most value for the money that we do have to spend and that we limit things like capital carryovers.

Also, looking at the idea that the value of a dollar today might have less value a year from now and that we don’t have a crystal ball, we can’t judge what other kinds of influences are going to come to bear on the price of capital projects in the future. Right now there’s a lot of competition for trades people and workers for some of the building demands in Alberta. We feel in some ways that here in the Northwest Territories we’ve been swept up in those fast-rising costs of capital projects, and we want to look at ways of mitigating that, whether it means staging or pacing projects, I guess, in such a way that we can maximize the use of Northern contractors, maximize Northern content in those projects and certainly maximize Northern workers. If there are ways that we as a government can make decisions that will positively impact those things, those are the kinds of decisions that we want to make.

Also, in our capital planning it’s been brought up — and it’s a very good point, and I’m sure Members will want to elaborate on this — that we have gone away from standardized types of design and engineering on buildings, and we’ve put a lot of emphasis on consulting with client departments. PWS has put a lot of emphasis on consulting with client departments on what they’re looking at. And then a lot of consulting is done around programming that’s going to be in these facilities, and I think that in doing so, maybe we have gone a little too far the other way.

If you have a chance to build a major piece of capital infrastructure, it would be nice if it was reflective of the area. There are a lot of things that would be nice, but given the demands on our capital budget, I think we have to think a little bit more about utility, and certainly we need to think about the ongoing costs of operating those facilities. The O&M piece can soon add up in years to come, so the integration of more standardized design and engineering of buildings will help steer away from perhaps some architectural features that might cost us a lot. Also, we need to think about conservation and efficiency of buildings. We need to think about how much we need to spend at the front end to ensure that we aren’t paying exorbitant

operation and maintenance costs on an ongoing basis. So those are things that I think it would be very prudent of our government to consider when it comes to our capital.

With that, Mr. Chairman, like I said, I’m sure other Members have things they’d like to raise and points they would like to elaborate on with respect to the interim appropriation, so I’ll leave my general comments at that. Thank you.

Mr. Chairman,

as

Mrs. Groenewegen has pointed out, the interim appropriation is one where it will give us time to work on our main estimates process and give us the time to do a proper review of the steps we would like to take as the 16th Assembly.

The O&M as highlighted is fairly straightforward, as the Member has pointed out, in capturing what we require to run for the three months of this interim appropriation.

The capital plan is one where it is different. Initially a plan went to the departments, requesting what would be required in a full year, looking at the timing of our process, so that contracts could be let in a timely fashion in order to get materials ordered and construction done. So we went out with that initial process, met with committee, and after review with committee and looking at some of the items, we went back to departments to request what was required as an absolute during this time, what could be later left to the May/June budget session, and came back with the revised document and are presenting that now at this point.

As well, we’re in full agreement with the whole capital plan process. As a government we’ve realized, in looking at the supplementary appropriations, for example, of the past government, that the final supplementary appropriation has grown significantly, a large part of that being capital carryovers for one reason or another. So we’ve initiated an infrastructure committee to review that whole process of looking at how we get capital done in the North, at the timing that contracts are let, the whole process of when a capital infrastructure plan should be tabled and voted on. So there’s a whole number of things that will be incorporated into this process.

As well, I agree with the capital planning itself on structures, the type of design. We need to look at the way we do that and how we carry forward with that within a tight fiscal environment.

One of the other challenges we find and that the Member has pointed out is that we’re challenged that many of our trades people in the North are being offered lucrative employment in other jurisdictions and, as well, contracting companies. Many of our larger companies that used to do some of our larger projects in the Northwest Territories

have now moved on to other jurisdictions and are not putting in tender packages or RFPs for a number of our projects, so that is also an area of concern when we talk about competition in the Northwest Territories. That’s all having an effect on us, and we do need to deal with that. We will be coming forward with recommendations as that committee does its work. Thank you.

Thank you, Mr. Chairman. I am in agreement with my colleague Mrs. Groenewegen in her comments, but I would like to make a few of my own. I’ve mentioned previously that I feel there’s a necessity for us to take a different mentality in regard to our budgeting and our fiscal planning.

I spoke the other day about living within our means and establishing a budget which more closely reflects the actual costs that this government incurs over a year’s period. I know this is an interim appropriation, but I want to re-emphasize that it is extremely important that we change the way we budget, in my view. I would hope to see that when we get our full budget in May/June, the numbers are much closer to reality and that supplementary appropriations become a thing of the past, used only if absolutely necessary in an emergency situation.

I wanted to comment on the Minister’s remarks. He states on the first page that the capital investment expenditure amount reflects the full-year requirements for projects currently under construction, projects that need to be tendered. And then on the last page he states that the $110.291 million in the capital investment expenditures represents a 4.7 per cent increase from the 2007-2008 capital plan.

I’m concerned that if the capital expenditures that we’re approving as part of this interim appropriation are not the full amount of capital that’s required for ‘08-09 because it’s only those items which are under contract or safety measures or are ongoing, we’re already a 4.7 per cent increase over last year’s capital. So when the full budget comes forward in May/June, how much more are we liable to spend on capital? I would like an explanation of that statement.

To the report from committee. I totally endorse the statement that we need an overhaul of the entire capital planning process. I think that’s been mentioned more than once. I just wanted to reiterate that as well.

Lastly, my concern about energy efficiency planning is that we are being proactive and not reactive. I would like to emphasize that as well. There is a statement in the report from committee which says, “Energy efficiency does not appear to be a consistent component of new infrastructure design.”

I am in total agreement with that and would hope that the government would be moving forward with a coordinated plan to minimize our expenditures in terms of energy and efficiency and so on.

I will have some questions later on. Thank you.

Thank you, Mr. Chairman. Ms. Bisaro is correct in the process that we are undertaking. At least at this stage the interim process is a feature of how we do business. We don’t see it too often in the life of a government, and this allows us to then have a very good look at the way we do our budgeting, the exercises we go through, and to make the required changes as we would like to see it as Members of the 16th Assembly. That is why we are doing the interim appropriation process.

The capital plan is one where we also realize that we’ll need to move ahead with key projects; for example, in areas where there’s only barge service, where materials for construction need to be done during the summer operations and, as we heard from Mrs.

Groenewegen earlier, the fact that

building in winter drives costs up.

The 4.7 per cent increase over the ‘07-08 amount is due to the increased cost of materials and labour that have been estimated in the process. As well, some projects that are highlighted for safety issues for moving on with agreements that have been reached have been addressed through this process as well. Thank you, Mr. Chairman.

Something fairly quick. I’m just learning the process of appropriation. The Minister’s opening remarks for the bill indicate all of the areas where the interim appropriation is exceeding one-quarter or one-third of the budget, 32 per cent of the budget. The various reasons for why these areas exceed 33 per cent of the budget all seem to be that contracts had to be put in place.

I was just wondering if the Minister could explain to me why there has to be an appropriation prior to contracts being in place, and if there wasn’t another accounting method that can be used to still put the contracts in place with the understanding that the appropriation would be coming with a full budget.

Mr. Chairman, the process we used was, as Members highlighted, using one-third of the amount we would normally use during a fiscal year. The reason there are some areas of going over would be, for example, if we’re going to enter leases for facilities or renew any of our existing leases through, for example, Public Works and Services. They have to enter into agreements for a full year, and it would be difficult to try to do a month-by-month process. Some of the contracts, as-and-when contracts, as we go out to people for work during the summer into the year require an annual appropriation. For Municipal and Community

Affairs, for example, because they fund their regional operations in their first quarter to a large amount, that’s why they’d get more of their dollars.

The exercise we go through and the reason we do that is, for example…. Well, the rule would be that without the authority to spend the money from this House, departments could not enter beyond the month-by-month situation. So no department can spend dollars unless this House has given approval, and that’s been taken into consideration when there are contractual obligations that run beyond the first three months of our operation. Thank you.