With that, we’ll take a short break and begin with the Department of...

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I’d like to call the Committee of the Whole back to order. At this time I’d like to ask the Minister responsible for the bill if he has any opening comments. Minister of Finance, Mr. Miltenberger.

Thank you, Mr. Chairman. Mr. Chairman, I am pleased to present the 2010-2011 Capital Estimates of the Government of the Northwest Territories.

The estimates outline appropriations for infrastructure investments of $221.856 million in the 2010-2011 fiscal year. This amount includes $40.140 million in infrastructure contributions to community governments.

In early 2008 the Ministerial Subcommittee for Infrastructure completed its review of our capital

planning process and presented its findings in April 2008. The subcommittee subsequently made recommendations to the Financial Management Board for improving how we plan for, acquire and deliver required infrastructure.

An important recommendation from the subcommittee was that our government take a more corporate approach to planning and delivering its infrastructure. The proposed plan before us today is consistent with this new approach.

Our revised approach, including the approval of the capital budget in the fall, allows for better planning for both the GNWT and contractors. This is because the tendering process can begin sooner, contractors can fit projects into their schedule, encouraging more bidders and, therefore, generating the greatest level of interest and competition possible before contractors have already filled their order books for next summer’s construction season. Based on the results of implementing the 2009-2010 Capital Plan, our revised approach is working.

I would like to remind Members of the magnitude of our revised 2009-2010 Capital Estimates of $426 million.

These revised estimates represent the largest planned investment in community government infrastructure in the history of the GNWT, at a time when our economy has experienced a slowdown due to the global economic recession and pullback in our Territory’s mining and oil and gas sector. Combined with proposed estimates of $222 million in 2010-2011, our government will inject a total of $648 million into the NWT economy over two years, creating significant contract and employment opportunities and address infrastructure needs across the NWT -- for schools, health facilities, highways, airports and other transportation infrastructure. We will continue to provide a stable source of funding for community governments so that they can properly plan to address their infrastructure needs over the long term.

As Members are aware, the GNWT, like all other jurisdictions, is faced with a significant deferred maintenance deficit. Based upon our recent assessments, this deficit is estimated to be approximately $470 million. Consistent with the objectives of our new capital planning process, the projects identified in the 2009-2010 and the 2010-2011 capital plans will address approximately $119 million of this deferred maintenance once those projects are completed. It will be necessary to keep our focus on this issue to ensure we have the proper facilities from which to deliver required programs and services for our residents.

Major highlights in the 2010-2011 estimates include:

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$63.9 million for highways and winter roads across the NWT;

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$43.5 million school replacements and

renovations;

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$40.1 million to contribute to community

infrastructure, which includes $28 million to continue to base fund community governments for infrastructure investments;

•

$17.5 million for airport replacements and

improvements;

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$2.5 million for information technology projects to improve how the government manages and secures health records.

I am prepared to review the details of the 2010-2011 Capital Estimates documents. Thank you.

Thank you, Mr. Minister, for your opening comments. At this time I would like to ask the Minister if he will be bringing in any witnesses. Mr. Minister.

Yes, Mr. Chairman.

Does the committee agree that the Minister bring in his witnesses?

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

Mr. Minister, for the record, could you introduce your witnesses?

Thank you, Mr. Chairman. I have with me Ms. Margaret Melhorn, deputy minister of Finance; Mr. Paul Guy, acting deputy minister of Public Works and Services. Thank you.

Thank you, Mr. Minister. Welcome, witnesses. General comments in regards to opening comments. Mr. Abernethy.

Thank you, Mr. Chair. I would like to thank the Minister responsible for Finance for his opening comments. I am happy with the detail provided. I am also excited to actually get into the detail as we move forward, so I will keep my comments short.

The $648 million over the two years, $222 million this year, I think that’s great. I think now, given the economic realities, is this time for this government to be investing in infrastructure to try to kick-start some work in the Territories. But $648 million is a lot of money and, to be quite honest, I am a little worried about our capacity to actually get these projects done. I would like some reassurances from the Minister that we can actually get this amount of work done in the best interest of the people of the Northwest Territories. It is pretty ambitious.

Just as another note, I am quite happy to see the $119 million going into deferred maintenance. I mean, for us to get so far behind on deferred maintenance is very unfortunate and I think this is a giant step on moving forward to address some of that $470 million we have in deferred maintenance. Hopefully we will be able to get more and more over time.

So I look forward to getting into detail and if we could get some assurances on how we actually hope to accomplish the $648 million over two years, that would be great. Thank you.

Minister of Finance.

Thank you, Mr. Chairman. I thank the Member for his comments. By our estimate across government looking at all the different program areas that are doing capital, we got at least 75 percent of our projects out the door. Some departments like Public Works and Services are in the 90 percent range plus, so we have been working very, very hard to get these projects and money out the door so the projects can be built.

Yes, we are paying a price for having cut capital over the years as we constantly went back to cut the capital budget as a way to deal with some of our financial issues. There is a long-term price to that, which is what we are now paying today. I think we all agree that going forward we want to avoid such an approach to not put ourselves in a situation or our successors. Thank you.

General comments. Ms. Bisaro.

Thank you, Mr. Chair. I just have a few comments. I agree with Mr. Abernethy, that I am pleased to see that we are not reducing our expenditures at this time. I think, in the current economic situation, that we’ve chosen the correct way to go and to keep our investments and our spending on infrastructure at a high level, not as high as last year, because that was a bit much. I think where we are going is in the right direction.

I also like the fact that we are shifting, as the Minister put it, to a more corporate approach to planning and delivering of infrastructure. I think that we are headed in the right direction. I see some changes in some of the planning that has been done through PWS and through the Ministerial Committee for Infrastructure and I like what I see. I get a sense that we are thinking further ahead. We are trying to streamline things somewhat and we are not reacting. We are being proactive, and that, in my estimation, is a great way to go.

I am concerned about the size of the infrastructure budget. I agree with it, but I need to say I am a little bit concerned that we don’t bite off more than we can chew. I think that the recognition was made in this budget that last year’s budget, this current year,

the ’09-10 infrastructure budget, was huge and the ’10-11 is proposed to be large, but not huge. So again I think we are going in the right direction.

I am also a bit concerned about the carry-over amount. They will be added to the ’10-11 budget whenever that is determined, but we will have carry-overs for the ’09-10 budget year and the size of those carry-overs can have an impact on whether or not we are going to be able to accomplish all of the projects that we are proposing to do in our ’10-11 budget. I think it has been reasonably well thought out and probably most projects will get done, but I am concerned that over the 10-year period or eight-year period, we’ve had significant carry-overs every year and I would just encourage the government to keep working on reducing that carry-over amount.

I also approve of the focus on deferred maintenance. I have mentioned that before and I am very glad to see that that is a focus of this particular capital plan.

Lastly, there is mention about providing funds to community governments. It is a stable source of funding. I think the proposal is to keep the level of funding from last year and carry it forward for a number of years, but I think we have to be careful even in this era of gas tax money for communities for various and sundry infrastructure, that as our communities take over more and more buildings as the government devolves buildings and various other infrastructure to communities, we have to make sure that they have the funds available to look after those buildings to do the maintenance required on those buildings and also to replace those buildings if that is necessary, because many of the buildings that the GNWT has given to communities are definitely not new.

So I would encourage the Minister to consider in future years maybe doing a cost of living increase on the infrastructure money that goes to communities, but to at least consider evaluating the amount that they currently get, evaluate how their circumstances are changing, and change the amount, hopefully upward if it’s considered to be necessary. Thank you, Mr. Chair. That’s all I have.

Thank you, Ms. Bisaro. Mr. Miltenberger.

Thank you, Mr. Chairman. Once again, I appreciate the feedback from the Minister…from the Member. We agree that we want to try to reduce the carry-overs. A lot of the work we are doing in terms of process is to make ourselves, as a collective, more efficient, which we think we are doing.

We also recognize that with capital comes O and M costs, and MACA works with communities. That’s one of the considerations that has to be considered. I would point out in last year’s budget, while

everybody else, our average increase was about 3 percent funding to committees; communities was increased about 9 percent for their O and M. So we are very cognizant of our need to support communities and we will continue to work collectively on how we best make sure we maintain that service. Thank you.

Thank you, Minister Miltenberger. Last on my list, Mr. Krutko.

Thank you, Mr. Chair. I think that this is a pretty major undertaking to lay out this type of investment, but more importantly to stimulate our economy at this time. I think it’s important, especially for the region I represent, with the downturn of what we are seeing in the oil and gas sector and no real outlook on where we are going with the pipeline, I think we have to realize the importance of this type of funding. In that comment, I would like to make mention that we not lose sight of initiatives that other communities have had and the challenges communities are facing to just deal with the infrastructure capacity that they have, but more important the capacity they are going to need to offset the high costs going forward regarding community infrastructure. I think we have to focus on trying to find ways to work with those communities, help them with their capacity challenges regardless of if it’s project management, technical support, more importantly finding ways to reduce the cost of O and M for those communities and especially using those infrastructure dollars to look at ways that we can reduce those costs by way of biomass, residual heat, ways of reducing the operational costs of all outdated facilities, especially capital transfers that took place to communities. A lot of these facilities are well up there in age, 25 to 35 years old, and they will have to be replaced or major retrofits done to improve the operational costs of those facilities. For example, water treatment plants and public facilities such as garages, warehouses that communities manage under the transfer arrangements with this government.

Again, I think it’s important that we continue these type of investments, but not lose sight that there are communities out there that haven’t concluded their assessments by way of their infrastructure needs and looking at the energy. Those are studies that have to be completed under the access to the gas tax.

Again, I think it’s important also for this government to realize that there have been motions passed in this Legislature for such things as community access roads to gravel sources, the challenges we face in small communities of not having access to gravel and the effect it has on community development.

I think it’s important that we as a government and a Legislature look to find ways to work with those

communities, but more importantly to take advantage of these capital investments and ensure those capital investments are there for the communities that have challenges to their community infrastructure and having access to a gravel source that can provide them with the building materials they’re going to need to shore up a lot of these buildings. In light of climate change and the effects we’re seeing of coastal erosion, permafrost melting, and the effects it has on public infrastructure, whether it’s building infrastructure, highway infrastructure, or airports, I think it’s something that we cannot lose sight of. We’re not immune. If anything, we’re the most impacted by what’s happening in our environment.

I think it’s important that we do whatever we can to fulfill those commitments we made in the 16th Assembly to connect communities, to improving community infrastructure, and to commitments we’ve made by motions in this House and carry out those commitments through capital investment.

I’ll just make reference to the Aklavik road access project. The community is working on that and trying to get some movement on it. They’ve done a plan in regard to looking at ways of taking it to the second phase, which will look at the engineering design and geotechnical work that has been done, not realizing that if this federal infrastructure runs out in the next two years they may not have access to these resources. I want to get some assurances from this government that there will be dollars available to communities to complete these projects and, more importantly, for those communities that still haven’t come forward with their capital infrastructure needs because of lack of resources or lack of capacity in our communities to take it on. Communities are struggling dealing with just the basics of programs and services dealing with infrastructure challenges from personnel, whether it’s SAOs, financial officers, and now we’re asking them to take on the technical responsibility of developing plans to bring forward and identify the infrastructure that they’re going to need. I believe that challenge still has to be with the Department of Public Works and Services, the Department of Municipal and Community Affairs, and with communities to ensure we assist all 33 communities in the Northwest Territories.

I’d like to ask the Minister regarding this budget if he can give me some assurances that those communities will not lose out on this type of activity going forward and that they are not left behind because they have to do more planning or require more technical information to come up with their capital investment.

Thank you, Mr. Chairman. We are, as we all talked about over last year and this year, engaged with the federal government whose contribution we have to

acknowledge in compressing funding programs into two years to get as many projects on the ground as we can during the time of this recession. We’ve also come to agreements with communities where they are given money now in a block funding arrangement for capital that doesn’t have to be spent on a yearly basis but can be accrued as they finalize their own community plans and capital infrastructure needs.

Our intent here is to work with communities, not to disadvantage communities so that as we move forward, when we look at requirements and assistance needed, be it for community energy plans or community infrastructure plans, the intention of the government is to work with communities to get that work done. For example, we recently met with the community members from Aklavik and they laid out some of the work that they’ve been doing and some of their requirements for further ongoing assistance with myself and the Minister of ITI. Those are the kind of discussions that are fruitful in assisting the community to have some certainty as they figure out how they move forward with some of their own particular initiatives.

Since I have over two minutes left I want to make sure I use up every minute I can here. I just want to make reference that one of the things that we’ve been talking about when we look at our public infrastructure and highway infrastructure, but I think at some point we realistically have to consider permanent bridges where we have a ferry operation. In light of what we see in Fort Providence, I know it’s not a perfect project but at least it’s getting us to have permanent access to the South and, more importantly, that we have to consider all our highway infrastructure and consider that option for other crossings besides the crossing at Fort Providence. Look at the Liard crossing, look at the Peel crossing, look at the other crossings with regard to the Bear River and other infrastructure that’s going to be needed. I think this government has to seriously put money into that research while we have the federal access to I think it’s $500,000 a year for research. Use the federal infrastructure money to do that work so that when we have those studies completed, we know exactly what the actual costs of replacing these crucial infrastructure by way of bridges on our highway systems to improve the year-round access to southern areas, whether it’s through the Yukon or Alberta. We have to do a better job of ensuring we improve that infrastructure in the Northwest Territories.

I’d just like to ask the Minister if he could seriously consider looking at the $500,000 that we are receiving by way of the Building Canada funds for research and use those dollars to consider such requirements by way of more studies, more research, and looking at where the best potential crossings for those bridges will be. More

importantly, do that research. The last time this research was done was back in the ‘60s.I think a lot has happened since the ‘60s and this government now has a responsibility for that by way of taking on the Deh Cho Bridge. Don’t just focus on that bridge, look at other bridges in the Northwest Territories.

The government recognizes, as does the Member, the importance of bridges as we talk about the Mackenzie Valley Highway and our Roads to Resources and all these initiatives. When you calculate in all the money including the Deh Cho Bridge and all the dozens of other bridges we’ve put in up the valley over the last number of years, we’re going to be spending hundreds of millions of dollars on bridges. We recognize there’s going to be a need for more major crossings. A lot of the bridges are of a smaller nature. We recognize the Member’s concern about bridges up in his area. We agree we want to make use of the resources that are there to do the planning so that as we move north we are as prepared as possible and don’t want to lose time to do research that could be done ahead of time.

Thank you, Mr. Miltenberger. Next on my list is Mr. Bromley.

Thank you, Mr. Chairman. I believe this is the second year that we’ve handled our capital budgets during the fall and I was encouraged to see the Minister’s statement that based on the results of implementing the 2009-2010 Capital Plan our revised approach is working. I wouldn’t mind a little more evidence than was provided in that statement. I’m wondering specifically, as well, whether or not we have a prescribed evaluation process in place for actually documenting and determining how well the process is actually working.

I have to say we are putting a lot into deferred maintenance. I think our support from other sources allows this to happen. I’m very happy to see that and I’m hoping that a good part of that also addresses some of the need for energy efficiency so that we can enjoy longer-term benefits as well as the immediate benefits of getting some of that maintenance done.

I am concerned about the information technology cost. Just looking at our estimates for 2009-2010 I think were at $13 million. The revised estimate is at $26 million. This is an incredible expense. I see less is listed in the mains this year. Who knows what the revised will be? There are very few jobs involved in these expenditures. There is, as far as I can tell, an unproven record of efficiency from these investments. We know on the basis of problems elsewhere in Canada, I believe the Auditor General has commented on Ontario’s situation and I believe it was called a fiasco there. I’m not sure if it was the medical health records management system that

they put in place. The public is aghast at what was being spent there for what we’re getting from it. I’m hoping the Minister of Finance will actually do some evaluation on these very large and significant expenditures.

The Minister listed a number of major highlights, but I was disappointed not to see a couple of things. One is -- and perhaps this has been mentioned -- the need to get on top of the environmental liabilities that are represented by the several hundred facilities this government owns throughout the Territories that are now aging; a large proportion being over 30 and 40 years of age. We have not done any assessment on those other than a few, literally a few. These are huge liabilities, we know. We’ve spent considerable resources in upgrading our fossil fuel storage tanks across the Northwest Territories, because the federal government is, probably correctly, always ratcheting up the requirements for safe storage of fuel and so on. We can be assured, based on our experience and this trend of ever higher standards, that the environmental liabilities and the cost to deal with them will be huge and will impact all our other programs.

A second thing that I didn’t see was the opportunities again for dealing with renewable energy infrastructure, getting that in place, and building renovations that we really should be taking advantage of with the economic stimulus federal dollars that we’re receiving. I’ve been disappointed. We are doing some through the Housing Corporation. We’re doing 80 or 100 renovations there and so on. But there are major needs in both government buildings and public programs that are needed and will pay immediate dividends. Those things are job intensive and they will lead to ongoing recoveries and reductions of cost in the future.

That’s all I have for now. I’m looking forward to getting into the page by page. Mahsi.