Thank you, Mr. Chairman. I’m here to present for the committee’s consideration the 2011-2012 Capital Estimates of the Government of the Northwest Territories.

The estimates outline appropriations for government and community infrastructure investments of $155 million in the 2011-2012 fiscal year.

The estimates do not include appropriations for housing infrastructure proposed by the NWT Housing Corporation in 2011-2012 totalling $16.4 million. The appropriation for these investments will be sought during committee’s review of the 2011-2012 Main Estimates. The NWT Housing Corporation’s proposed 2011-2012 Capital Plan, however, has been included in the estimates document as an information item for review and comment by committee.

Including the proposed housing investment will bring the total planned infrastructure investment in 2011-2012 to $171 million. This means that over the life of the 16th Legislative Assembly we will have

invested over $1 billion in badly needed infrastructure in the Northwest Territories.

The 2009-2010 and 2010-2011 capital budgets represented an unprecedented level of investment for our government.

We made a conscious decision, as part of our fiscal strategy, to invest in infrastructure at a time when private capital investment was declining in order to help mitigate the effects of the economic downturn. We will have injected over $700 million into the GNWT economy over this year and last, creating significant contract and employment opportunities and addressing infrastructure needs across the NWT for health facilities, schools, highways, airports and other transportation requirements.

We will also 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.

Although smaller than previous years’ budgets, the 2011-2012 Capital Estimates still allow for a substantial level of investment, and permits the completion of many of the projects begun during the 16th Legislative Assembly. As Members are

aware, starting in 2012-2013 we will have returned to more historical levels of capital investment in order to maintain a fiscally sustainable path.

Major highlights of the Infrastructure Acquisition Plan include:

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$37 million for highways and winter roads

across the NWT;

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$25 million for school replacements and

renovations;

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$28 million to continue to fund community

governments for infrastructure;

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$13.6 million for replacements and renovations to health facilities;

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$10.5 million for airport replacements and

improvements;

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$12 million for small capital projects across all departments;

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$5 million for the Deferred Maintenance

Program; and

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$3.9 million for the Capital Asset Retrofit Fund Program for energy efficiency upgrades to existing GNWT buildings.

Following remarks by the Honourable Michael McLeod, we are prepared to review the 2011-2012 Capital Estimates with the committee.

Thank you, Mr. Miltenberger. We’ll now go to Mr. Michael McLeod for his opening comments.

Thank you, Mr. Chairman. Good afternoon. I’m here with the Honourable Michael Miltenberger to discuss the 2011-2012 Capital Estimates of the Government of the Northwest Territories.

As lead Minister for infrastructure, I was tasked with revising the Government of the Northwest Territories capital planning process, with the aim of improving how we plan for, acquire, deliver and maintain infrastructure necessary to deliver required programs and services for our residents.

The changes we have implemented as a result ensure that all major projects are properly planned and costs are accurately estimated prior to seeking approval from this Assembly. This improved process, including the consideration of the capital budget in the fall rather than the late winter, has not only enabled us to increase our own investment in

critical assets but has also allowed our government to take advantage of both new and accelerated federal infrastructure funding. The results of this improvement are reflected in the 2009-2010 and the 2010-2011 capital budgets. These budgets represent a combined investment in excess of $700 million, including an unprecedented $485 million in 2009-2010. Community governments also saw investment of $127.5 million over this period.

These changes have improved the delivery of large capital projects; for example, the Department of Public Works and Services managed $162 million in capital projects in 2009-2010 and is currently managing $149 million in 2010-2011. Major contracts have been awarded on over 95 percent of these projects and work is being successfully completed within the approved budget.

One of the major changes to the capital planning process was to make deferred maintenance a priority for investment. Since the inception of the Deferred Maintenance Program on April 1, 2008, significant progress has been made to reduce our deferred maintenance deficit and keep critical building assets operational. Through a combination of large capital projects, complemented by our Deferred Maintenance Program, we will have reduced our deferred maintenance deficit by approximately $145 million by March 31, 2012. Diligent management of our government’s deferred maintenance deficit will continue to be a priority for many years to come. The 16th Legislative Assembly

can take credit for recognizing this significant problem and developing a vigorous and sustainable plan to address this issue.

While proper project planning and managing our deferred maintenance deficit are priorities, our government is also mindful that we need to be innovative and look for ways to reduce the energy consumption of our buildings and minimize their impact on the environment.

Through the delivery of our infrastructure programs the GNWT is demonstrating its commitment to responsible energy management and environmental stewardship.

I would like to highlight two building projects that will be completed within the next few months that highlight how our new process is working to provide focus on energy and the environment.

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The new data centre in Yellowknife, currently nearing the end of construction, has no heating plant. The facility will obtain its required heating from the computer equipment hosted in the building. Excess heat from the new data centre will be shipped to the GNWT central warehouse next door and help reduce this building’s fossil fuel requirements and in turn reduce greenhouse gas emissions.

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The new GNWT office building in Inuvik will obtain its heating requirements from the Northwest Territories Power Corporation power plant that is located directly across from our new building. Waste heat from the power plant will be shipped to the office building via a short pipeline and should eliminate the requirement to heat this building with natural gas.

In conclusion, I would like to say that despite the challenges we still face, much progress has been made to improve how we plan for, acquire, deliver and maintain our infrastructure. A more rigorous planning process has produced solid projects. We have eliminated the need to return to the Assembly to seek additional funds for those projects that were developed through planning studies. We have significantly reduced and will continue to reduce our deferred maintenance deficit and we have demonstrated an ability to think outside the box and seek opportunities, where appropriate, to develop innovative projects that reduce our reliance on fossil fuels. Many energy efficiency initiatives are underway, including the adoption and use of biomass fuels.

I look forward to discussing the 2011-2012 Infrastructure Acquisition Plan with the Assembly so we can continue the good work we started three years ago when we first gathered here as the 16th Legislative Assembly.

Thank you, Mr. McLeod. Mr. Miltenberger, do you and Mr. McLeod have witnesses you’d like to bring into the Chamber?

Yes, Mr. Chairman.

Does committee agree that we allow the Ministers to bring in their witnesses?

Thank you. Sergeant-at-Arms, if you could please escort the witnesses into the Chamber.

Mr. Miltenberger, could I please get you to introduce your witness for the record?

Thank you, Mr. Chairman. I have with me Margaret Melhorn, deputy minister of Finance.

Thank you, Mr. Miltenberger. Mr. McLeod, could I please get you to introduce your witness for the record?

Thank you, Mr. Chairman. With me I have Paul Guy, deputy minister of Public Works and Services.

Thank you, Mr. McLeod. Is committee agreed that we proceed with

general comments in response to opening remarks?

Mr. Bromley.

Thank you, Mr. Chairman. I want to start by saying that I’ve been listening closely to the remarks that have been made by the Ministers and there was considerable material that I agree with and support, but I want to note in most general initial comments here that I recognize the international economic considerations and to some extent the decisions of this government have placed us in a position where I recognize the need to support the government’s fiscal strategy that sees us through these times of uncertainty. I stress that we have a combination here of the international sort of globalized factors such as the recession and some of the decisions of this government that have placed us in a vulnerable financial position. Thus with those there is a need to be somewhat cautious. I support that approach.

I recognize that we’ve enjoyed considerable capital budgets in the last few years resulting largely from federal programs, such as the Building Canada Fund, the Economic Stimulation Fund and, of course, the Affordable Housing Initiative. I also recognize that we’ve made very good use of those funds. There have been some tune-ups to how we achieve our infrastructure and how we plan.

I saw a very interesting article that I will forward to the Minister of Public Works and Services, in Focus magazine, about large infrastructure projects and some of the phenomena that are associated with that in jurisdictions throughout the world, many of which are reflected in our own jurisdiction. I see some progressive progress on that in terms of delivering our infrastructure.

I also want to recognize the internal energy efficiencies and move towards renewable energy and new initiatives in that direction, and some of the savings that we’re making. I think we’re doing a good job there. I think we’re becoming a leader on that in Canada. I want to recognize that and stress that there is a need now. What used to be considered thinking outside the box is no longer, so we need to redefine that box and start thinking outside of the box again.

One of the ways to do that, of course, is specifically with full-cost accounting. We’re still looking at a conventional accounting approach. As a result, many of our efforts have stayed in the southern parts of the Territory, despite that fact that with a full-cost accounting approach there are huge opportunities for savings and moving further north. I think we have some projects in terms of using waste heat from fossil fuels, such as in the Inuvik project, that are getting quite far north and I’m happy to see that now. But many of the renewable

energy projects, I think the Tli Cho community of Behchoko is about as far north as we get and I see great opportunities for further gains there. Just by way of example, if we throw into the mix what the cost of building, expanding, maintaining, cleaning up after tank farms, the gains that could be made would become immediately obvious. That just does not seem to be part of the accounting yet. Hopefully it will be this year.

I also recognize that much of the work we do in infrastructure is really demonstrating the potential ways and in many cases the best ways of building infrastructure to our residents and our businesses. I think this is a very important step that we are taking in demonstrating these things, because it does provide a bit of a market for these. I hesitate to call them new technologies. They are not. They are old technologies that we are finally implementing. It does provide a platform for recognition by our residents and I see some uptake by our residents and businesses. That is to be commended.

I think most of my other comments are departmental specific. I did want to perhaps recognize a couple of things that perhaps we had some discussions on already, but one of them is the need to, when we have situations that are identical in two different communities where we are contemplating infrastructure and there is relatively little cost to choosing one community over another and that perhaps a preferred community is economically deprived relative to the other often as a result of whether or not they have had infrastructure projects, that should be part of the decision-making. I think there is a tendency for Ministers to take that to an extreme and think that we are suggesting that be a major factor in governing those decisions. That is not true. I think I am suggesting, and others, that it be a consideration. I am hoping that will start the... We have raised the point before, others and myself, that when we put in large infrastructure, we need to be sure that O and M dollars are clearly identified and part of the budget so we don’t have really financial awkwardness in dealing with that situation. If we don’t plan for it, it can cause unneeded kerfuffles. I just wanted to, again, profile that little piece.

When we get into Education and perhaps Public Works and Services, I don’t doubt we will hear about the need to address some of the schools, the deferred maintenance on schools, and I think we let some things slide there. I would like to see a comprehensive approach with that.

Finally, the evaluation of the capital formula funding for community governments, I think that has been unchanged. Members have in the past and again this time around, I am sure, such as myself, will be raising the need to have a look at that and

recognize that economics have changed since we established that fund, $20 million or whatever it is.

Mr. Chair, thank you very much. I will leave it at that.

Thank you, Mr. Bromley. We will go to Minister Miltenberger for a response.

Thank you, Mr. Chairman. I appreciate the Member’s comments. We collectively have managed our way through, in this Assembly, some very significant issues with the wrench in the economy to what is happening in the world around us. I agree that the billion dollars would not have been possible without the cost shared dollars with the feds, some of it 50 cent dollars, some of it 75 cent dollars.

The issue of energy efficiency is a key one. I know the Member has said he is tired of hearing about the $60 million, but that was a commitment of this Assembly that is going to pay dividends for us. We will continue to look at the issue of full-cost accounting so we can fully capture the cost and negatives and pluses of any particular project that is being suggested.

The economic variable that the Member has talked about, we have acknowledged that we will look at that. Of course, I would just like to point out, when the Member mentioned two communities of comparable size and circumstance, it would of course automatically mean that this would be a criteria that applies everywhere except Yellowknife, which would have to be considered so that we do have a level playing field, but it is one that could require discussion. I think it would have some complexities that would be discovered as we look at it in detail. However, we recognize that it has been raised by committee.

The issue of the formal funding for communities I think are reviewed on a regular basis but, once again, we would look to the advice from committee. Thank you.

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

Thank you, Mr. Chairman. It takes a whole effort of the Assembly to work towards our capital budget. I am very pleased that we are able to get through it earlier, just because of timing in some of the communities that don’t have roads and have only access by winter roads. If you get the materials and supplies in at an earlier time, I am going to be pleased with that aspect of our capital estimates. As MLAs, we work hard in lobbying the Ministers, lobbying the government in writing or raising issues in the House and trying to get our fair share of resources for our constituency. I can say that is certainly the Nahendeh riding. I feel that we have our fair share of resources, but

constituents also point out that a lot of the lacking issues... I will kind of raise them as we go along.

I think the biggest thing for me is that many other ridings, including Yellowknife or Inuvik, have their huge projects like the Dementia Centre or the super school in Inuvik and other schools that are very expensive. However, in my riding I have two smaller communities, Trout Lake and Nahanni Butte, that all they are asking for is to have a look at their schools. I hope that there is a time that we can start building or replacing the schools in the smaller communities once again. It has always been Trout Lake’s contention that their original Charles Tetcho School has never been replaced. In fact, Education decided we use the community hall to take care of the educational needs. We never replaced a school in Trout Lake. That is something that is high on my agenda. I certainly would like the government to consider that as we move along.

I am pleased to see that there is some planning study money for the school in Nahanni Butte as well. They have outgrown their school. It is a log home. It is a log construction. I would like to see that school be in... It depends on the study too, I guess, and the engineering, Mr. Chair. The community would certainly like to see improvements in that area.

I spoke countless times on the highway system in the constituency I represent. I have five out of my six communities that are road accessible. In the wintertime, there are six. When I travel to my constituency, hold my constituency meetings, it is always high on the agenda as well. The roads, roads, roads and I noticed that the Minister of Transportation is up there. Maybe he can indicate some of the investments in Highway No. 1, Highway No. 7 that are coming up in the capital estimates, or else, if he chooses, I can wait until the appropriate time when the department comes up too, Mr. Chair. I continue to press for it, especially for Highway No. 7. It is one of the gateways to the North by road. I always press the issue that the federal government created a new Nahanni National Park Reserve. They want the world to see it. One of the ways to do it is through our highway system. I would encourage the Finance Minister to use that argument when he can with our federal counterparts and Minister of Transportation as well.

I am pleased to see that a lot of the little issues are being taken care of as well. I am pleased to see Transportation is looking at runway lighting for Nahanni Butte as something that is being worked on for seven years. It is a small expenditure, Mr. Chair, but it is a huge pay-off for a small community like Nahanni Butte and all the visitors that go there and are concerned about the safety in the evenings, and it’s about getting there earlier as well. So I’m certainly very, very pleased with that expenditure.

I would be remiss not to also mention the highway that goes from Fort Simpson towards Wrigley. You know that that also needs a lot of work. The residents of Wrigley use that as their lifeline. They are continually frustrated. There was some investment this year, but it was just so hard to keep up, but that will be one of the legs that has to be improved as we work towards a Mackenzie Valley Highway system, Mr. Chair. When that becomes a reality or should a future pipeline meet it, I really think we should start planning on improving that portion of the highway too.

In terms of Fort Simpson, it is the regional centre and in my recent constituency meeting in Fort Simpson, residents also spoke about the need to upgrade the hospital. I’m pleased to see there is going to be some investment in the capital budget. It looks like there’s some planning dollars for it. You know, I would only urge a couple of things. I know that we are looking at standard buildings, but if this is becoming a regional centre, we’ve got to plan 20 years down the road as well. We’d certainly like to see replacement of a full operating hospital in Fort Simpson. Who knows what the future will bring. Like with the development of the highway, development of a pipeline, increase of any development such as mining, you will certainly see Fort Simpson grow.

So in the planning, putting the work towards it, I would like to see them consider those factors. Minister Lee was with me in Fort Simpson and we heard clearly from residents, “include us in the planning.” A couple of them are actually staffed to make the hospital more user friendly and make it ergonomic, because they are the ones that use it on a daily basis. So that’s certainly something that I would urge as we work towards the planning of that.

The other huge issue is housing. The Minister responsible for the Housing Corporation did indicate we are going to be faced with declining funds, so I’m not sure how we are going to invest in housing in the future. First things first, get people into the units that are there, the units that we built. Get them into there. Spend money. I do agree that we do have to spend some money on reinvestment and renovations and retrofits of the existing homes. That’s where the need is. But we do have to wrap our heads around how we provide housing in the future. Hopefully something comes out either with the federal government or some kind of lobbying effort.

We are speaking about having an NWT Day in Ottawa. I don’t know if housing and the declining CMHC funds is part of our strategy, but I would certainly like to see it as well there. It’s a big issue in all my communities. Just in terms of housing, as well, a lot of it is when we build houses, people with higher incomes aren’t eligible for programming, Mr.

Chair. I feel, and I know, that these are the people we want, the people with the higher incomes that can make the mortgage payments, that won’t fall in arrears. So these are the people who should be in homes and not rejected. I will be speaking about that later on in the week, because I really feel that’s one of the ways to get money back into NWT housing programs, one of the ways of having more money to build more houses in our communities.

I would just like to thank you for the opportunity for commenting on the opening remarks to the Minister of Finance. Mahsi.

Thank you, Mr. Menicoche. We’ll go to Mr. McLeod.

Thank you, Mr. Chair. I want to thank the Member for his comments. He raised a number of issues across the North and, of course, in his riding. The capital process in the last while has changed and we are starting to certainly see the benefits of using this process that requires us to follow a number of steps. We are quite satisfied that the changes are positive. The capital process and the capital budget have been really challenged in the last couple of years as we went forward to deliver many projects across the North. A lot of the regional centres have seen fairly large expenditures and large projects go into the communities.

We have also worked quite well with the smaller communities in doing replacement programs and new infrastructure and also infrastructure for alternate energy in communities such as Kakisa and Fort Simpson, and McPherson and Inuvik.

There are a lot of projects the Member has referenced in the budget for planning studies. The school in Nahanni is one, as the Member is aware. We also have other schools that are being looked at and considered, Lutselk’e and others. There is still some work being done for facility condition reports. I think one was down in Trout, and Education has that in their hands now and are reviewing it.

The Department of Transportation still continues to be involved in providing a lot of capital investment. In this coming budget that we will be dealing with on Monday, the budget for transportation is at $60 million with roughly $30 million to $40 million carryover from last year. So it will still be fairly significant and as the Member is aware, we continue to support and do a lot of the renovations and work that needs to be done on Highway No. 7. Everyone is, of course, in agreement that it’s something that will enhance tourism as we improve the quality of this road.

We’re also working in the Member’s riding to work on some of the airport work that needs to be done. The reallocation in Trout is going quite well. The lighting in Nahanni Butte, of course, as the Member

has indicated, has been a concern for some time. We had to find some comfort that putting in the runway lighting, that the training was also there for people doing the maintenance and that these lights are not going to get damaged, because the cost to replace them is quite high.

The Wrigley road is also seeing investment and will continue to do so. This is a stretch of the road that will probably be used quite a bit as the pipeline project goes forward, and, of course, we would continue our discussions with the proponent of the pipeline to ensure the road is of a standard that would withstand the increased traffic flows as this project is in production.

The Fort Simpson hospital is in the planning study. There will be all kinds of opportunity for the community of Fort Simpson, and all the surrounding communities in the region that utilize this facility, to provide input. Consultation is part of our planning study and we also would expect that we would talk to industry to see if there are any concerns or anything that could be flagged as an issue for them as the pipeline project and oil and gas progresses in that area.

Housing will probably be better served if the Minister responsible responds to the concerns regarding the declining funds and the work that he’s doing with CMHC along with other jurisdictions from across Canada to flag that issue. It’s been on the drawing board for some time and I would leave it to him to respond to that. He’s indicated this morning in his statement that there’s been a lot of work, over 700 houses constructed in the last little while and over 1,000 repairs done. So there are considerable things happening with housing, but I would defer those comments to the Minister of the NWT Housing Corporation.

I thank the Member for the issues that he’s brought up. Thank you.

Thank you, Minister McLeod. Next on my list is Ms. Bisaro.

Thank you, Mr. Chair. I have a number of comments, many of which have been expressed already by my colleagues and I’m sure will be expressed again, but I feel they are important enough that I will repeat them.

You know, at the outset, I want to say that I agree with the fiscal strategy which has been outlined by the Finance Minister both last year and this year. I think it is the right way for us to go, and the fact that we’ve scaled back our capital budget for this year as compared to last year is a good thing. We don’t need to be putting ourselves in a situation where we are stressing ourselves to the max, particularly with the Deh Cho Bridge Project now in our lap as well.

I’d like to say that I think the changes to the planning process are proving to be beneficial and I

think both Ministers have alluded to that already. I believe, and I’m glad to hear the Minister say, now that we are approving the capital budget in the fall, that it is having a beneficial and positive impact on the work that we’re doing.

I do have some concerns in terms of carryovers. We’ve had huge dollar values of carryovers in previous years and at some point in time I would like to get the information of the carryover from this current capital fiscal year and how it’s going to impact on the budget that we are discussing right now.

Again, a positive note, I’m really glad to see a continued focus on deferred maintenance. I think it’s been a specific focus of our capital budgets. I think this is the third or fourth year ongoing now and I think it’s making a difference in our properties and our assets and I think it’s certainly a way that we want to continue to go.

As well, I am impressed with sort of a bit of a shift in thinking. I think Minister McLeod referred to it as thinking outside of the box, but particularly in terms of our heating requirements, innovative heating requirements and energy adaptations for new buildings and particularly referencing the computer centre here in Yellowknife and that we are using waste heat from power plants, we are looking at geothermal. All of those things are positive and they will assist us in keeping our infrastructure costs down, so I would hope that that is going to continue.

In terms of the Housing Corporation, I know that it’s not officially part of the budget, but I do need to comment on the declining federal dollars relative to operation and maintenance of our housing stock. We increasingly add to our housing stock, we build new units, we replace new units but we also build many new units. At the same time, I don’t see that we have a plan to deal with the O and M costs that are going to be more and more on the backs of this government as opposed to the federal government through the next 15, 20, 30 years. So I think it’s something that I know that the government is aware of it and is working on it, but I think it’s something that we need to stop hoping that the federal government will bail us out. I wouldn’t say stop fighting. We definitely need to keep fighting for the money, but I think we also need to put a contingency plan in place and I don’t sense that that is out there.

To me, it points to a need for the Housing Corporation to do a significant evaluation and analysis of their policies, and to totally revamp them and revise them so that they work for our current situation that we’re in and the times that we’re in.

I do have a concern with the lack of projects in the Department of Education, Culture and Employment, specifically with regards to Yellowknife. We have received or we have seen a 10-year education

facility plan for Yellowknife. I am concerned that the recommendations from that plan, that report, are not reflected in this capital budget. I am particularly concerned about Aurora College with a lease that expires in 2012, with Sissons School which is badly in need of renovations and upgrading, and with Mildred Hall School which needs completion to their renovations which have never actually been done. I see no indication in the budget or in future years that these things are going to be looked at, so that’s a general concern.

Like Mr. Bromley, I would like to see analysis or evaluation of MACA’s infrastructure contribution formula for communities. I gather that I think we have been told that that is in the works. I certainly hope if it’s not in the works that it’s going to be in the works. Certainly the amount of infrastructure contributions to our communities for capital has been pretty much steady for quite a number of years and it really needs to be evaluated. Community infrastructure deficit is only growing. It never seems to go down, it always seems to go up. This is something that this government has to be aware of. I would like to see an evaluation and an update of that contribution formula certainly before the next capital budget.

In terms of our general capacity for capital projects, I’d like to know the impact of the Deh Cho Bridge Project on our capacity to deal with capital projects. We have been kept up to date over time as the Deh Cho Bridge Project has progressed and changed and we’ve been updated, and I thank the Minister of Transportation for that. But I do have a bit of a concern that in continually increasing our infrastructure capacity we’re adding more buildings, but we also have a Deh Cho Bridge Project which impacts our ability to finish these projects, to get them completed on time. That’s just a general concern.

I am, as Mr. Bromley, concerned about the way that this government in general accounts for operations and maintenance costs for new buildings. In terms of capital projects, we’re very much up front about the cost for the project and it gets substantiated. Once the building comes on line all of a sudden it’s kind of like the government goes, oh, gee, we have to heat this, we have to put lights on, and so on and so forth. Those costs are not planned for. They need to be. When we know a building is coming on line in the fall of any particular year, that budget year needs to include operations and maintenance costs for that new building. It’s a change in perhaps budget planning that I think is coming, but I don’t see much evidence of it. It really is an important part of our operations and maintenance budget. I do appreciate that we are starting to get better O and M costs in the project substantiations for capital projects. I think that’s a really good start, but we now have to take the next step and put those O and M costs into the operations budget.

Lastly, I just want to comment on the capital infrastructure budget binder which we received. The documents were easy to understand and I particularly appreciate having the project substantiation documents in the binder up front so that if there are any questions, it can be looked at. There’s an awful lot of information in those projects’ substantiation documents. I appreciate having that up front.

I will have questions about specific projects when we get into departments, but that’s all I have for now.

Thank you, Ms. Bisaro. Mr. Miltenberger. Mr. McLeod.