I think it’s good that the public be aware of clause 4 and be prepared to take advantage of the opportunities that presents, as well as the policies that committee is recommending.

I just would like to comment on the discussion that has taken place about the various existing heritage funds. There are three that I know have been thrown out in public consultation and that many of us have referred to all of us. The first one, of course, is the Norway Pension Fund. It’s essentially the same thing referred to as a heritage fund. Its purpose is to invest parts of the large surplus generated by the Norwegian petroleum sector. I recognize that there’s an obvious difference before devolution for us in this regard. It’s to counter the effects of the future decline in income as their petroleum resources decline and to smooth out the disrupting effects of highly fluctuating oil prices, a phenomenon that we suffer from tremendously. That fund is at about $473 billion last time I looked. It could be a bit more or less now. Obviously, it’s very considerable and offers that country a security that we can only dream of. I think it’s inspiring for us to be considering that sort of goal in mind.

Which brings me to the second one, which is the Alaska Permanent Fund. It’s very similar. Also running around $35 billion. Quite a bit substantially less by more than an order of magnitude from Norway. Despite the fact that they had almost completely tapped out their North Slope oil and the pipeline is running half empty now. The reason it’s

so low is because, as my colleague has noted, Alaska gives out those dollars on a regular annual basis to every man, woman, and child in Alaska. As a result they do not have that for future generations.

Of course, the Alberta Heritage Savings Trust Fund is the third example that we all refer to and we know that has not got rave reviews from just about anybody. It’s the lowest of all. I believe the last I heard it was about $11 billion. It could be less now as they’re running a deficit. They’ve clearly been unsuccessful at achieving the sorts of goals that we have in mind with the Heritage Fund Act.

My druthers would be that we focus on the Norway Pension Fund sort of model. That will become more viable, I think, as devolution transpires and we have the opportunity to nail down additional funds. It needs to be possibly discussed before then so that those funds can actually be directed, some proportion of those funds, into such a mechanism as our Heritage Fund. I know we did have early discussions on that but we didn’t come to resolution. I wonder if I could ask the Minister, will he be taking that discussion forward as the next step. Will he be recommending to the 17th Assembly, for example, that we begin the process in those discussions? I grant that there’s no emergency on that, but I would like to know if this government will be providing some encouragement in that direction.

Firstly, as we talk about the non-renewable resources sector, we have to as well not only put savings aside because of the depletion rate and the fact that there is not going to be any more once it’s gone, but we also have to focus on opportunities like the fibre optic line up to Inuvik that would create a whole industry that’s not based on the non-renewable resources sector that would allow us to have other forms of income, which I believe is what Norway has done as well. They’ve kept the money out of circulation so that it doesn’t skew the economy so you don’t have that sort of false economy tied strictly to the influx of oil dollars.

This is, as the Member has indicated, an instrument that starts the process. As it develops, there will be accompanying development of policy and more on the regulations, how things get managed, if there’s money put aside. We have 21 years that the fund will be sitting there. I would suggest into that 21-year period there will be a review of where to next, so that we have this type of full discussion. I would suggest that myself for sure probably won’t be around the table 10 years from now, but that discussion will have to take place by legislators of the day.

I will be, if we get this act passed -- which I’m assuming we will -- it will be on the table for the incoming government along with the all the fiscal information we have and all the work that’s been

done in relation to this act. I, as well, am partial to the Norwegian model and think it has great merit.

Next I have Mr. Hawkins.

Thank you, Mr. Chairman. Just a few observations here. I really am concerned with the purpose not being sharp enough. I disagree with my colleague who thinks or believes strongly -- and I say that respectfully -- that dividends should be paid, but I think the purpose really needs to be narrowed down over the long haul. Although I don’t necessarily think it needs to be done today, but one of the issues being is that if the purpose is truly for the people of the Northwest Territories, then it needs to be directed as such. I think this money needs to be targeted directly to our revenues that we need. Because ultimately this will be for hospitals, education, or even maybe general repairs of who knows what type of infrastructure. I mean, the demand is so long we’d be here all day talking about ideas of where to spend it long before we’d make any revenue on it. So I wouldn’t support any ways of chopping it up because I think if our real goal is to make sure that it’s for a communal sense for the people of the Northwest Territories, then what better way than to put it into a general revenue. I just would have hoped that it would have been sharper, as I pointed out. In my view this could respond to changes in corporate revenues.

One thing that I would say, it’s almost as if we have to caution the public on potential expectations and what this can deliver. This is an important vehicle that’s being developed and I think that can’t be stated clear enough. It also isn’t pennies from heaven where it will be endless. We have to know that this will probably start out very small and take quite a few years to grow and quite a few years to get large enough to have any really effective difference on the wishes or direction that the people of the Northwest Territories want at that time. Keeping in mind, as well, that it’s 20 years from now and those expectations and beliefs may change as to the particular focus.

I think it’s critical. It’s a lesson that I hope in some form or manner every parent teaches their own children, which is start saving as quickly as possible, and those are lessons I think anyone can learn and teach their kids. I think here is a clear demonstration that we’re living good values. I always think that some of the economics that we deal with here are really kitchen table economics, which is we have to make sure that we don’t spend more money than we make and we have to also keep a keen eye as to what’s important from a value sense. Putting away money as soon as possible in whatever increments is possible is important. That’s what has brought us here today, which I think is very important.

One of the issues that we see here today is that it is an investment vehicle. Of course it has to be set up before we’re able to direct revenues. This is the first step that is going to be probably one of several others. The challenge, of course, is deciding early as to where and what type of rate will investment revenues be pouring into this long-term bank account. It’s been suggested, as well, how they should be managed and those are problems that are going to have to be reviewed through the regulations, and certainly I look forward to whoever is here at the day 10 years from now when they do a general direction of where the fund is going in 10 years, as is cited in the bill under a 10-year review.

I think the Minister agreeing to switch it from 10 years to 20 years really gives us a chance to do something with the savings. I’m very hopeful that the savings will become true opportunities for the future. I have fully supported the position that FMB should manage the fund, at least until the review has decided or dictated that there’s a better way of doing this. Because I don’t see that if it’s just a fund sitting in a bank account, we have very smart money managers in our territorial government and they manage our money quite well. I have often said, and I strongly believe, that the Northwest Territories has a government that has money problems or investment problems, it’s only based on political direction or decisions. It really doesn’t come down to the fault of the staff. It’s politics that always seem to play a role.

Just on the note of politics, although I was unsuccessful on trying to get into the bill the suggestion that a two-thirds majority should be involved in any change provided to this act whether it’s an amendment to how the money should be spent or an amendment to make an amendment within the bill, I feel still today fundamentally strong that we must protect the bill at any cost. By suggesting a two-thirds majority of the House, as I believe was stated by Professor Hogg, I believe that is a valid position that could be taken. As we all know, it could be somewhat constitutionally controversial on the type of position if two-thirds majority is right or even legal, but it’s been noted various times throughout the committee process as we’ve been moving forward on the review of this bill that it’s not uncommon but not seen and used in the wrong way. In other words, it could be done. I was hoping we could have gotten that into the bill but it’s not here today.

Just a last piece I do want to highlight on. In reviewing the bill I noticed a couple of typos and I’ve already brought it to the attention of staff and as I understand it, they don’t get changed, but the one worth particularly noting is I caught under Summary and it points out to 20-year review -- sorry, 20-year transfer -- that the money is not allowed to be tapped into. In speaking with the officials who obviously know their jobs very well,

said you can’t change the summary. So there will have what I would call an appearance of a contradiction. Even if the summary says 10 years the money can’t be tapped into under the summary, it really has no effect on the mechanism and mechanics of the bill, as I think I understand it. That error has been carried through under headings, but as I’ve been informed, the headings can be adjusted and is certainly within the full purview of those who come up with the final draft. That was obviously from taking a very keen look and reading the bill word for word, very keen, with those hawkish eyes I’ve got.

Mr. Chairman, I think it would be understated that today is a good day. I think today is actually a brilliant day for some of the things we’ve done in government. It’s a shame for most of us, and I’d dare to say probably none of us will be here in 20-plus years, but I’m hoping that in 20 years they’ll look back and think the decisions made to move forward on this Heritage Fund were an extremely wise move. It may have caused some controversial issues as to how we should spend money on present-day problems, and I recognize that those are very important, as mentioned by my colleague Mr. Beaulieu, and I think in many cases he’s right about emergency need versus trying to save money for the future. The balance of that is really a political decision and it’s a challenging one. But I certainly hope that the generation that comes after us looks back and says we were a wise Assembly and we did things that really made a difference. I believe strongly today the Heritage Fund Act is one of those types of decisions that people will be grateful that we did. Thank you.

Thank you, Mr. Hawkins. Next on my list, Mr. Krutko.

Thank you, Mr. Krutko. Minister Miltenberger.

Thank you, Mr. Chairman. The Member has been in this Assembly 16 budgets, as have I, and we’ve talked since that time about taxes, resource royalty taxes, mining taxes, ways to raise revenue. We’ve tried hotel taxes and road tolls. We contemplated other taxes, as well, increases to the payroll tax. We’ve lived through the worst economic downturn since the Great Depression in the 1930s where we had to be very careful in terms of further negatively impacting the business community at a time when they were suffering significant loss.

The challenge for the 17th Assembly is going to be

we are going to create an instrument, and this fund is not tied to devolution, this fund is not tied to a resource royalty sharing agreement. It was initially in there for discussion but it ended up after everything was said and done to be just a savings fund, a heritage fund that would be controlled by the Legislative Assembly and they will have to determine, looking at their budgets, revenues and expenditures, if there’s an ability or a willingness to put any funds into this program. I would suggest to the Member that there will be significant attention being paid to the concern that the Member has raised that there won’t be much support if we’re going to be cutting programs to put money into this savings program, so it will have to be done carefully with good thought and consideration. But I’m not in a position to give any guarantees about what developments may happen in any particular region or constituency and whether they will be able to keep a percentage of the royalties in the region for whatever use may be deemed necessary.

I would point out that with the pipeline we do have a $500 million socio-economic agreement that’s contingent upon the pipeline going ahead, and that was negotiated as part of that project. It has nothing to do, necessarily, with this Heritage Fund, but it addressed some of the issues that the Member made reference to. Thank you.

Thank you, Minister Miltenberger.

General comments. Mr. Bromley.

Thank you, Mr. Chair. I want to follow up on a few points, actually. The first one is people have made reference to the amount of time

that the funds will remain in a sealed account gathering value, assuming we get some dollars in there. When this idea was first put forward, I know we had lots of discussions and I think there was general agreement that this would be an intergenerational fund and should be set aside for at least 30 years. Yet when the bill came back to us, Mr. Chair, I was startled to see that funds were put aside for only 10 years. I see committee has bumped that up to 20 years, still shy of a generation. I’m wondering what was the Minister’s thinking when he dropped that period down to 10 years.

Minister of Finance.

Thank you, Mr. Chairman. When it initially was looked at and the discussion was held, 10 years, a decade, was thought to be a good starting point. Then we got the recommendation from committee to go to 20 years and we’ve concurred with that because we think it’s a substantial time frame and will give the fund a chance to build up some principle and some interest. So we concurred with that and I was under the impression that 20 to 21 years was pretty close to what was deemed to be a generation, I may be 10 years off, the Member said 30 years for a generation. But the point being that we’ve agreed to a substantial increase in the time to 20 years. Thank you.

I’m not an expert on what’s a generation. My understanding is that there’s 25 years to a generation, but I think we did have that sort of longer period in mind and I was very curious, I still am, about why that was reduced.

Moving on, I’d like to just briefly discuss this cart before the horse concept that my colleague Mr. Krutko raised. I think it stresses the point that we need to review how we are spending existing funds and we need to recognize that our most lucrative resources are rapidly being extracted and exported with little lasting benefit. I agree with Mr. Krutko that we have not acted responsibly to nail down full benefits and appropriate levels of benefits, and everybody knows right now that these precious metals are exponentially... It’s quite the phenomenon in today’s economic globalized world. These minerals are exponentially increasing in value. Gold is something around $1,800 an ounce. Diamonds are at an all-time high and, of course, we know that our fossil fuels are going up every time the economy ramps up.

I’m curious, the Minister mentioned we had considered or discussed resource taxes and I don’t recall that at all. I remember raising it a number of times, but I don’t recall a serious consideration of a resource tax. I guess I’d like to get his take on where we’ve been with resource taxes and why we couldn’t contemplate, or the 17th Assembly

contemplate a resource tax that would immediately

start to put some real dollars into these funds, into the Heritage Fund. Thank you, Mr. Chair.

Going back to 1995 in the last century pre division, since that time of the four Assemblies I’ve been in there’s always, during the course of the Assemblies, the issue of resource tax and mineral tax has come up. It’s been discussed, it’s been sort of like looking at a new car. You kick the tires, you examine it, but at the end of the day the decision has always been not to proceed. So the 17th Assembly will have the same

authorities and rights that every other Assembly has had before it to look at how it wants to set up its budget, how it wants to deal with the revenue side. So they will be able to look at whatever they deem is appropriate in terms of how they want to generate further revenue, including, I would suggest, a revenue tax or any other type of instrument that they may think is appropriate. Thank you.

I appreciate those comments from the Minister. It’s good to get some of that history. I guess and I suspect others have tried to get a good discussion going on a resource tax during this term and I regard that to mean some research done and some considerations presented to us by Cabinet on what would be involved, what the difficulties are and so on. I’m wondering if the Minister is planning to raise this in the transition document, and resource taxes are just my sort of pet idea, but how is the Minister going to profile this in the transition document of the idea of getting some dollars into this fund and dealing with the hard decisions that he has mentioned and several of us recognize are needed.

As we look to the transition document, there will be a revenue option section when it comes to finance providing fiscal update information that’s available and the tools that are going to be available to the 17th Legislative Assembly in terms of generating revenue. There has been this issue of the resource tax that came up during the revenue options roundtable in this particular Assembly. We’ve also had different types of discussions about things that the Member holds dear as well. Things like what do you do with the carbon tax, and it’s been a discussion that’s been approached carefully by most people. We’ve got it in looking at a Greenhouse Gas Strategy, how we’d manage our emissions and the future discussions that would have to take place around that subject. So there will be a revenue options section for the 17th Assembly

to consider. Thank you.

I appreciate the Minister’s remarks again. I’m glad to hear that it will be mentioned at least there. I guess my last point here is the opportunity to establish an ethical investment protocol for when funds are in there, and I did make

the comment during the committee review, clause-by-clause, that standards should be established to ensure income from the fund principal is obtained from ethical investments, which observe environmental human rights and labour standards and avoid investment in socially harmful enterprises such as tobacco and arms production, and that we should consider a provision to allow the Heritage Fund, for example, to issue bonds from time to time, possibly an appealing mechanism for the public with the bonds to be guaranteed by the government. In this way the public, whose this fund really is, would secure some indirect ownership of the Heritage Fund through the public’s bond purchases.

The other aspect I mentioned was that income earned on fund investment should be used to promote the NWT’s environment, economic and social sustainability, and that a list of suitable projects should be established and should include such projects as infrastructure development aimed at energy conservation initiatives, development of renewable energy sources, resources to support long-term social benefit such as the building of early childhood programs, elder support and cultural centre, and community-based economic diversification. Obviously, these now are the 17th Assembly’s bailiwick. But again, are these things going to be profiled in that transition document and does the act, the bill, provide any provisions for direction towards these objectives? Thank you.

As we develop the regulations around the fund, the issue of the investment guidelines in terms of not only being conservative but if there is the will to look at investment in ethical funds if those funds exist, those funds are available and that can easily be built in. I wasn’t quite clear on the whole comment the Member made about bonds, but once again going forward all this information will be available to the 17th Assembly. The 17th Assembly will decide

on how this fund is to be fleshed out and if it’s to be invested in and where the money is going to come from and how the investments will be made, under what conditions.

The issue of a list of prescribed projects that it would be used for, the money would be used for eventually, I suggest would be a subject of some significant debate listening to the discussion around the table from the MLAs from small communities, for example. All that will be possible in the 17th Assembly.

General comments. Detail?

Turn to page 3. Before we begin maybe I’ll just, for the benefit of the Minister, committee, suggest that we allow the Minister to remain in his seat if there are any votes

to take place in the House so that he doesn’t have to… So because of his hardship, we’ll allow that to happen at this time so he can stay seated. Bill 10, Northwest Territories Heritage Fund Act, clause 1.

---Clauses 1 through 3 inclusive approved

Clause 4. Mr. Bromley.

Thank you, Mr. Chairman. This is obviously a fundamental clause. It provides some guidance on how the fund will be managed. I just want to note that the public spoke very clearly and fairly consistently on this aspect and thought that there should be arm’s length administration of the fund and that it should not be under the trusteeship of the Financial Management Board. An arm’s length agency could indeed report to the Legislative Assembly and could be subject to verification by an independent auditor. This would allow for and promote public involvement in the administration and guiding vision of the fund. Members of the independent agency could be drawn from the public at large and represent a cross-section of cultures, genders, economic and social interests, and geographic regions. Consideration could be given to having two political representatives on the board, though not as chair. For example, one from Cabinet and one from regular priorities and planning. I guess I would like to hear what the Minister thinks of this consideration. It didn’t make it into this version of the bill. Is this something we could consider in the future? Does the Minister have particular reasons why he’s insisting in here that the Financial Management Board would be the trustee of the Heritage Fund?