Thank you, Mr. Chairman. The fundamental question that keeps coming up, even though it’s in our consensus system, is the concern by some Members that somehow they don’t feel that this budget process is inclusive enough, that the budget doesn’t have clear and visible handprints of the Regular Members, when I would suggest to you that things like all day kindergarten was an initiative pushed by the Members, or on-the-land programs. If you want, I have a list on my desk upstairs of the things in this budget alone, let alone every other budget that we have reviewed, where we have tried to work collaboratively with the Regular Members, yet the complaint, budget after budget, is that somehow the perception is that it ends up being done in isolation.
As I said in the House the other day, this is a process where the government proposes a budget to the Legislative Assembly. The government proposes, the Legislature disposes. We have walked through this process now for decades, and when the budget is approved at the end of the day, it tends to be approved almost unanimously.
If there were significant changes, for example, if Members said we don’t support any new initiatives, we want all those funds taken out of the budget, we would be listening very, very closely. If the concern is that those types of things are there, even though we just got a letter that said you wanted all the previous initiatives that were agreed to funded, and you want all the new initiatives in this year over and
above what was in the budget funded, if there was a reconsideration of that position, that would be very helpful as we look at the management issue of sustainability.
With the budget we have before the House, if it’s approved as is, it would leave us with $142 million of borrowing room.
The press didn’t quite get the story right when they said that there is a $200 million surplus. What they didn’t mention was that we passed a capital budget in October worth considerably more than that, and we‘re obligated to find savings within the O and M budget to help offset that cost, which is what the $200 million is for. We did that and we are still borrowing money for capital and we are going to be in the borrowing mode here for the next four or five years.
Yes, the resource revenues don’t flow to 2016. We have set ourselves up to manage our way to that date and we will continue to do that.
The issue of no new revenues versus building our economic base, the issue of taxation versus building our economic base, increasing our population, putting in that critical infrastructure that’s going to promote economic development is a path to the same end. If there is debate over taxation to industry, resource tax, land rent tax, mineral tax, we can have those, but we know we have at least one mine, or two mines that are within the end of their life, and if we add to the cost to Northerners, if we increase income tax, if we increase other costs in one of the most high cost territories, jurisdictions in the country, it seems to be counter-intuitive that somehow that is going to encourage people to move here, it is going to encourage business to do business, it is going to encourage people to stay, it is going to encourage students to come back. The much more productive and constructive way, in our mind, is to expand our economic base.
When we’re in the House with Mr. Kalgutkar and Deputy Minister Aumond, I would be happy to walk through the whole list of percentages that the Member, in her mind, didn’t seem to add up. The supps that we bring in are demand driven, and the one that’s going to be coming into this House, you will see has fairly significant demands on the health side, which we know it’s coming, we never know how much it’s going to be and it depends on the uptake. It’s in keeping with some of the concerns that were raised in this House during question period about mental health, for example, and what are we going to do about it and there’s a huge demand, and sometimes it reaches a point where there is an intervention by the government or Health and Social Services.
We are going to continue to use short-term borrowing to keep us moving. But the reality is, and it feeds into the debate over the Heritage Fund and
how much money should be going in there, we are basically spending almost every cent that we take in, plus we are still borrowing. We are managing and working very hard to manage that issue because it can easily tip the wrong way. We are very concerned about that, hence the 5 percent in the Heritage Fund versus the 25 percent which in a perfect world I think everybody would like to see. But given all the concerns and the numbers that the Members raised about how come we are doing this and why are we spending this money and why, if we don’t have new money, are we spending it is a good question.
The issue of funding from within is one that’s easy to say and hard to do. We have to keep in mind that when we touch inclusive schooling and what we are proposing to fund with the junior kindergarten, that’s being done through some reallocation. It’s a very, very modest amount and that alone causes significant angst.
The issue of the Mineral Development Strategy and what’s better and why are we putting it into business development and not into social programs, the reality is we are spending $1.2 billion on social programs, roughly, out of our budget, $1.1 billion or $1.2 billion. What we need is to be able to have a strong economic base to support and pay for those social programs, so you need to invest some money at the front end to promote and support and sustain and balance environmentally sensitive resource development and other economic development like the Mackenzie Valley fibre optic link. We always have to keep in mind, as legislators, the whole 360 degree, full circle of demands on the table. We can’t just focus on one at the exclusion of the other. At the end of the day, we have to keep in mind how do we pay for everything. It’s a very significant question and it’s an important one. Growing our economic base is where the issue comes back to.
The hydro and why we are doing a business case when we already did one, we did a business case for hydro development that was going to go straight from the Taltson straight to the East Arm to the mines with the mine as the only customer. That did not work out. The diamond mines were not prepared to sign on for power, take or pay, for the whole life of the project when the lifespan of the mines was in question. There was not clear support for the route of the transmission line. What is being proposed now is up the west side down an established right-of-way, but still requires a review. We want to bring a major transmission line with an intertie from the South to connect the North and South Slave. We want to work with the industry to see if we can put a spur or have them come and get power once we get that transmission line up to Behchoko.
We also know we will be able to hook up communities along the way. We will be able to provide back-up and more efficiencies in the system than we now have and relieve some of the pressure on Jackfish, which is fully subscribed to. So it requires both a business case and a technical case. We know technically it can be done, we just have to get it costed out. Once we have the numbers, we need to include the business case that’s going to show that this, in fact, is a revenue generator.
When we talk about revenue generation, it’s more than just what are we going to charge for power. If we can provide reasonable, affordable energy to resource development initiatives like the mines, which the existing mines already add over $2 billion to our yearly gross domestic product, and if we can work with the mine and extend mine life to about $250 million per mine per year, then if you do the math, one year of mine life extension could conceivably pay for the cost of that particular hydro expansion by providing that kind of basic infrastructure.
If you think of the negative and we just do nothing and we let the mine close and let nature take its course, one of the biggest costs, 30 percent, is energy, then just in direct employment in those mines is over 1,500 Northerners, not to mention probably at least another 1,000 or so in related industries. So we have an interest here about how we pay for social programs that consume the majority of our budget and we have to balance both of those needs and I think this budget tries to do that.
Why are we paying? We are taking on the responsibility of devolution. We have a vision, we have a plan, we have a responsibility, but we will also look at what other available programs are there, for example, federal P3. We were not successful at looking at the fibre optic line, something as big as transmission lines may meet the test, we’re not sure but we will, of course, look. As we look at generation expansion, we are going to be looking for equity partners. We have the door open on the fibre optic line, and as of yet, we have no takers for Aboriginal equity. But the door is open and we are prepared to look at all sorts of partnership arrangements to minimize the direct cost and burden on the taxpayer. Clearly, if we don’t drive this initiative as an Assembly, as a government, if we don’t provide the vision and the plan, nothing will happen and if we come up with a plan that has a $700 million or $1 billion price tag for two major projects, for example, and if we go to Ottawa and expect them to somehow write us a cheque, it will be a frosty, frosty, frosty Friday before that would happen, I would suggest, because the federal government is not in that business anymore. Their job is to enable folks to do their job, which is what we are asking them to do.
Give us the tools, untie our hands, enable us to use our authorities and our good proven governance skills here to manage our way to some development that is going to support our economic base and allow us to continue to fund at the level we all expect of our social programs. Thank you.