Thank you, Madam Chair. I thank the Members for their comments. I will address the broad issues we’ve made note of. There are some fairly specific departmental issues the Ministers will be addressing when they appear before the House to defend their budgets.
With regard to some of the common issues, I appreciate the positive comments on the budget. It is a challenge to balance the many competing needs with not enough resources. The reality is this is not so much about restraint as it is about living within our means. We are spending almost $2 billion for 42,000 people and we have expenditure growth that is starting to exceed our revenues. It’s not that our revenues are being cut back. They are not growing as fast as we’d like, but they are increasing very modestly. The way we have come to expend money has not declined or not flattened out the same way as our revenue has, so we are spending $2 billion and we just have to figure out how to spend it most effectively. There are some hard questions being posed by the Members.
Mr. Yakeleya talks about employees, the size of government. It’s a legitimate question. What is the limit to growth? How many employees can business or government or the $1.8 billion afford?
At the same time, Mr. Yakeleya often pointed out the often contradictory positions we find ourselves in. As he asked in one breath about the number of employees and that we have too many, he pointed out that we still need nurses in every community and RCMP in every community. It’s a challenge we all face, addressing the contradiction that we want to have increased services at our community levels, but at the broad macro level in this Legislature we have to come to an understanding about the size of government, for example.
We’ve been having some discussion in the House about energy and the cost of living and how we’re structured. How do we bring the costs down? Those are very fundamental, broad issues. We
know we have to generate power more cheaply, and we’ve indicated that investing in alternative is the way to do that. At the Energy Charrette, as the Premier pointed out earlier today, the guest speaker pointed out we have the most complicated 65 megawatts of power that he’s ever seen. So not only are there generation issues but we have to look at a system that is very complicated and how do we make it more streamlined and effective. We have to look at all the aspects of that.
So the concern is about the future looking grim and bleak, to me we just have to come to a balance with our expenditures. We are not talking cutbacks; we are not talking reduced budgets. We are just saying we as a government have an appetite for growth that exceeds our ability to sustain it. We have been growing so consistently that people now consider not growing as a cutback. It’s a distinction, a very important distinction that people see not growing as restraint that somehow we must restrain ourselves when all of us around the table know when we get our paycheques, we look at what we can afford. Our income is coming in, our income is some of the highest in the country, but we have tastes and appetites that put us in a situation where we spend more than we bring in.
I would just like to make an observation, as well, about our debt. We have debt and the biggest number, about $400 million, is long-term debt. It’s debt that is self-financing. We still have to keep it on our books, like the Power Corp debt, some $180 million, the bridge debt, most of that is being paid for by our revenue stream that is separate from this budget. At the same time, we have our short-term debt, $272 million. That is the kind of debt that I get every month when I put all my expenditures on my credit card, and when the bill comes in, I pay it off, short-term debt. We all do that.
So when you put all those numbers together, some folks try to say we can’t handle the money, you’re out of control, we don’t deserve any more money. I would argue the actual debt we do have, real debt that’s not paid off by outside revenue streams or that’s not just short-term debt that we pay off every year, is very modest for a corporation that has almost a $2 billion budget. That’s why we have an Aa1 credit rating and all our indicators are strong and why we are going to negotiate and get agreement from the federal government in the next few weeks, hopefully, to bump up our borrowing limit. That’s why we can afford to say we need to make these critical investments in roads, in energy and generation. That’s because collectively we’ve managed these budgets year after year in a way that’s put us in that position, and it’s allowed us, if you think back, 2007-08, when there was a huge economic downturn, the worst since the Great Depression, we survived that in fairly good shape. We rebuilt and things have regenerated.
We’re still about 25 percent down from where we were during the glory days when the mines were being built and everything was getting into operation, but we have rebuilt and we had enough flexibility in our budgets to withstand almost $80 million just in the course of a few months, costs that came because of these perfect storm events that Mr. Bromley talked about, the fire, the drought, the low water. Once again, we’ve managed our way through that. It has taken out our flexibility to a great degree, but we are still on solid financial ground.
Now we just have to look at the hard questions that we’ve been talking about here just in the last few minutes with the Members’ comments about the size of government, what do we do to control our costs. We know one of our biggest costs, about half a billion dollars, roughly, is tied to staffing and all the related costs to that, so it is an area where there is going to be all sorts of activity here starting in the next few weeks. The Power Corp folks are going to be looking at bargaining. We know that right after that all the other collective agreements in the government are going to come due. We’ve talked and I’ve talked about fair and affordable arrangements with the staff, the debate about the size of government. I looked at the numbers yesterday. I asked on the vacancies. We have roughly 1,000 vacancies of different kinds, some that are in the process of being filled, some that are vacant, some that are because they haven’t been deleted, but some that have to remain empty but there’s a… We have a significant amount of things to look at when we look at how to manage the money.
Mr. Bromley asked specific questions about new money or re-profiling. He referenced the education initiative and the wellness courts, and those are new money. It’s not re-profiled money. The one that is re-profiled money is the income support, changing income support into folks to help people get jobs and the taking of money from income support to put it into housing. That’s re-profiled, transferred money.
I would also argue that as we come to grips with fossil fuels, we’ve been on that trek now really seriously, in my mind, this is year eight. The beginning of the last Assembly, if my memory serves me correctly, we came back from one of our retreats as a government early on, we put $60 million on the table to start the work. We’re looking at building our own biomass industry. We’re looking at converting our own buildings. We’re investing tens of millions of dollars in encouraging people to look at more energy-efficient ways of doing business. We’re investing in solar. We’re investing in looking at wind, and we’ve committed to putting our borrowing limit towards very significant investments in the thermal communities to the transition that Mr. Bromley talks about. But it is a
transition. It’s not a stop one thing and start another. Even our guest speaker at the charrette said clearly you have to move or you can move or should move to solar and batteries and other alternative energies, but keep your diesel as backup because you need that failsafe and redundancy. This is a transition.
One of the big challenges for us… We can deal with those costs, of course, but our transportation costs, all over the world, I mean, the North is no different. Transportation costs are a very significant part of our fossil fuel consumption and there are not many viable alternatives to that at this point, be it for flying airplanes or driving down a road in your vehicle going to another community or going south. But where we do have control, we are making that transition, and I can accept that it may not be, and I do accept, because I’ve served with Mr. Bromley now for, this is the eighth year that he would like us to move much faster than we are, but we are continuing that investment.
He made a comment about a record of failure on projects. We have done a lot of projects. We, as I indicated in the budget address, by the end of this coming year, we will have started or are working on and are committed to about $1.5 billion in projects. I do remember some particularly in my time at this table that stick out that were problematic, two. One was the North Slave Correctional Facility, which goes back maybe three governments, which ended up as a cost-plus project. We got it done but it wasn’t as efficient and as effective as we would have liked. We did and we do acknowledge that the bridge project had some rough patches as well. But on all those projects, at the end of the day, we did end up with some infrastructure that is critical for territory building advancement. On the bridge one in particular, I don’t think anybody would now say they’d like to go back to the good old days of winter roads and ferries. We learn and we keep learning, and we’re going to do that as we look at things like the P3 at Stanton.
The issue of investments is going to be a critical one. We made a commitment already that the minute we hear the final outcome of the discussions between the Premier and the Prime Minister, that we will gather around the table collectively to talk about what that means and how do we move forward on those critical investments and what do we do as an Assembly and how do we set things up for the incoming Assembly.
I believe that there are with every challenge, I think, significant opportunities. We know what those opportunities are. We’ve got some very good feedback on energy. We know the things we have to continue to keep investing in, and we’ve done that again this budget, which is in the social program area, programs and services where we spend about $1.6 billion, and we’re going to
continue those commitments. But we are in the situation now in the life of this government where we’re going to be starting to make those tougher decisions that we talk about that can no longer be avoided and the need to talk about the things that we’ve never come to grips with like the size of government and what is affordable. Not just government but all the boards and agencies tied to government as well.
We have a lot of good things on the go and we have a lot of challenges, but of the five Assemblies I’ve been in, every one has faced challenges. They ask me what was the most difficult time as my time as Finance Minister. Have there been some really tough circumstances? I can tell you, looking back right now, the most difficult time was the 13th Assembly when the federal government cut their transfers overnight with almost no notice. I think it was 5 or 10 percent. We came in as a new government. We thought we had about an $80 billion deficit. By the time we staggered home at Christmas in shock, we were cutting $150 million out of the budget back then for the whole territory, and we had less than a billion in the budget. It was an incredibly traumatic time for the whole territory, including Nunavut. Everything since then has been on the road forward and up. Still challenges, but the first year after devolution I think we have a very good foundation to build on, things we’ve got to take care of, but this is just good management, and I’m confident that as we keep working together that we can do that.