Thank you, Mr. Speaker. Thank you, Mr. Moses.

4. Key Notes to the Financial Statements for 2011-

12

a. Note 6: Accounts Receivable

The standing committee noted with concern the substantial increase in the accounts receivable from the Government of Nunavut, which is close to $10 million. Most of this sum relates to health, and according to the Comptroller General, $2 million is non-collectable. Maintaining such a large interest-free receivable has cost implications for the GNWT, in that the government may have to borrow and pay interest on additional funds for its own needs, in addition to the loss of potential interest revenue.

The committee was glad to hear that the government is reviewing its interest rate policy for other jurisdictions, and may be able to charge Nunavut interest on individual items.

b. Note 8: Loans Receivable

This note has already been mentioned in connection with the repayment of the Discovery Air loan. The Standing Committee on Government Operations found another matter of concern in this note, namely outstanding Northwest Territories Housing Corporation mortgages. The amount listed as due to the GNWT is only $15 million. The Housing Corporation’s total mortgage balance as of March 31, 2012, however, was $41 million.

The committee was told that the difference is accounted for by the deduction of interest and subsidy on impaired mortgages, resulting in an overall figure for loans of about $36 million. Non-repayment subsidies totalling $20 million are then subtracted, to reach the $15 million figure. However, an allowance for doubtful accounts of $13 million results in a net mortgage receivable of only $2.5 million.

Members would like to think that the Housing Corporation can do better than this in collecting on its mortgage receivables. The present committee has already recommended, in its report on the Auditor General’s status report – Committee Report 4-17(3) – presented in the House June 14, 2012, that the NWT Housing Corporation continue its efforts to collect mortgage receivables and report annually to this House on the number of clients who have chosen a repayment option, the total dollar amount of repayments, and the total amount still outstanding as of April 1st each year, starting with

the data as of April 2012. The committee looks forward to seeing an improvement in the Housing Corporation’s mortgage collections within the life of this Assembly.

The allowance for doubtful accounts is an estimate of the amount of accounts receivable which are expected to not be paid. Overall, the 2011-12

GNWT allowance for doubtful accounts is $39 million, or just under 40 percent of the total loans receivable. In the previous year, the allowance for doubtful accounts was approximately 30 percent of the loans receivable. Part of the reason for the percentage change is the early repayment of the Discovery Air Loan, a one-time occurrence. Nevertheless, the committee would like to see better overall performance in GNWT collections, fewer accounts designated as uncollectible, and a lower allowance for doubtful accounts as a percentage of the loans receivable.

Recommendation 6

The Standing Committee on Government Operations recommends that the Government of the Northwest Territories monitor its loans

receivable and develop targets and measures to improve collections, with a view to reducing the allowance for doubtful accounts to less than 30 percent.

c. Note 15: Long-Term Debt

This note provides details of the GNWT’s long-term borrowing. The long-term debt includes loans from the Canada Mortgage and Housing Corporation, Citizenship and Immigration Canada – for the NWT Opportunities Fund – Yellowknife Catholic School debentures, and real return senior bonds redeemable at the option of the issuer. These borrowings totalled $198 million for 2011-12, a sizeable decrease from $325 million in 2010-11. The repayment of the NWT Opportunities Fund to the federal government is the major reason for the change. This note also gives the schedule of principal repayments on these loans by year to 2018.

Finally, the note shows how the government’s authorized borrowing limit is being used. The GNWT’s federally-authorized long-term borrowing limit was increased to $800 million by Order-in-Council on March 8, 2012. When the public accounts were being prepared, new federal regulations to define “borrowing” for the purposes of the Northwest Territories Act had not been finalized. However, the anticipated changes were known, and the 2012 table in the public accounts reflects the new definition.

The standing committee had previously sought clarification of what amounts are now included in the new long-term borrowing definition compared to the old one. The new definition involves some changes to the recording of the NWT Hydro Corporation debt, which reduces the amount on the books by about $23 million. However, capital lease obligations are now included, for $27 million, as are Northwest Territories Housing Corporation mortgage guarantees of approximately $31 million.

In 2011-12, under the new definition, the GNWT used about $572 million of its new $800 million borrowing room, leaving available borrowing capacity at $228 million. Had the old borrowing limit and definition remained, the GNWT’s borrowing capacity as at March 31, 2012, would have been $39 million.

The Standing Committee on Government Operations considers that the GNWT has paid a high price for the borrowing limit increase, between the need to wind down the NWT Opportunities Fund and concessions made in the definition of long-term debt.

Mr. Speaker, now I turn the report over to the chairman, Mr. Nadli.