Thank you. I’ll ask the Sergeant-at-Arms to please escort the witnesses to the table.
Minister Miltenberger, for the record of our proceedings today, could you please introduce your witnesses.
Debates of Feb. 25th, 2015
This is page numbers 5807 – 5846 of the Hansard for the 17th Assembly, 5th Session. The original version can be accessed on the Legislative Assembly's website or by contacting the Legislative Assembly Library. The word of the day was going.
Topics
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Michael Miltenberger Thebacha
Thank you, Madam Chair. I have with me Mike Aumond, deputy minister of finance; and Jamie Koe, the director of the Management Board Secretariat.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
The Chair Jane Groenewegen
Thank you, Minister Miltenberger. I’ll now turn to the committee and ask if anyone has any general comments regarding Bill 43. Mr. Bromley.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Bob Bromley Weledeh
Thank you, Madam Chair. What’s the definition of short-term borrowing as opposed to long-term borrowing?
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Michael Miltenberger Thebacha
Thank you, Madam Chair. The short-term borrowing is a borrowing that takes place over the course of one year. Long-term borrowing is borrowing that has a much longer time frame than that.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Bob Bromley Weledeh
Thank you, Madam Chair. Is there a prevailing interest rate that applies to this or how does that work? Is it different than the long-term borrowing interest rates? What would be the cost these days, for example, of a $275 million, $300 million short-term debt? I assume it would change through the year, but if I can get a rough idea of the amount we’re spending to maintain this borrowing capacity.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Aumond
Thank you, Madam Chair. We do have a cost or an interest on short-term borrowing and it’s based on what the prevailing Bank of Canada rate is at any particular given time as opposed to longer term borrowing debt, which for the GNWT for purposes now is ranging anywhere from, depending on what the type of the instrument being held, is in the neighbourhood of probably 3 or 4 percent. Short-term debt is a little bit lower than that. As the Minister said, it’s for those types of transactions, typically the debt is amortized a year or less than a year.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Bob Bromley Weledeh
Thanks for that information. What sorts of things are eligible for short-term debt? I assume that this is not debt that is self-servicing. It’s debt that we intend to simply pay off with revenues on the 1st of April of each fiscal year. What sorts of things would go into this? What sorts of things would we borrow under this short-term borrowing category?
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Michael Miltenberger Thebacha
Thank you, Madam Chair. Things like the firefighting, it could be infrastructure, it could be any requirements that come up during the course of a year that the government or the Assembly decides expenditures are required. I’ll ask the deputy if he wants to add any other further type of examples.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Aumond
Thank you, Madam Chair. Typically the government is in and out of short-term debt. Usually the longer we are into the fiscal year the more short-term debt we are into. As the Minister says, debt is primarily made up of operations and maintenance or programs and service debt, infrastructure. Most of infrastructure, as well, is financed through short-term debt, as well, other than those specific ones which we have financed over the longer term. For example, we know for long-term debt we have our Northwest Territories Power Corporation debt, some debt held by the NWT Housing Corporation and, as well, the Deh Cho Bridge are examples of long-term debt. Most of our infrastructure and, again, just the day-to-day dealings of government around the programs and service debt were financed through short-term debt.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Bob Bromley Weledeh
Thank you, Madam Chair. I appreciate this opportunity to learn a little bit more about this. Would it be true to say that this is a body of a potential source of funds for when we start overspending from our regular budget, or are there things that are actually put to this short-term debt regardless of the fact that we already have the dollars in our budget for other things, if you see the difference there?
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Bob Bromley Weledeh
How do we decide, I guess, and just cut to the chase on the last part of that, how do Members know what we’re choosing to put into short-term debt? Where is the transparency there and how can the public become informed about that during the normal course of events?
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Aumond
Thank you, Madam Chair. As I said earlier, I’ll start off by saying we generally start off the fiscal year in a surplus position, and the issue we’re dealing with here with respect to the $25 million corporate income tax repayment we need to make to the Government of Canada for an overpayment we received three years ago, is really literally like a one hour problem. On April 1st we will get a tranche of money from the Government of Canada with respect to our Territorial Formula Financing Grant, and we’ll be in good stead, but throughout the year, particularly this year is a good example where we’ve had some expenditures that we have not anticipated for such as the forest fire season or the low water. Additional to that, we also, depending on the cash burn rate of the government on a program and service level, may incur some short-term borrowing. As long as the departments have an appropriation from the Assembly for those budgets they can spend that, but it’s not like we pick and choose what goes into short-term debt. Long-term debt is something that we actually make a considered decision upon and it is usually brought forward to the Legislature. But short-term debt is what is undertaken to, sort of, keep the business of government going, much like an operating line of credit is, and like I say, on April 1st at 12:01, we will be back in a surplus position.
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters
Bob Bromley Weledeh
Again, that’s great. I’m getting a much better understanding. The last part of that was how is the transparency handled? Is there a website that Members can go to see what is being characterized as short-term borrowing, long-term borrowing that the public could access?
Consideration in Committee of the Whole of Bills and Other Matters
Consideration in Committee of the Whole of Bills and Other Matters