Thank you, committee. I call committee back to order. Committee, we have agreed to consider Tabled Document 416-18(2), Capital Estimates, 2018-2019. Does the Minister of Finance have any opening remarks?

Yes, I do, Mr. Chair.

Thank you, Minister. We have agreed to begin with general comments. Does the Minister of Finance wish to bring witnesses into the House?

I have to do my remarks.

I thought you were going to continue.

Thank you, Mr. Chair. Mr. Chair, I am here to provide comments on the GNWT’s Capital Estimates, 2018-2019.

The Capital Estimates, 2018-2019, total $261 million, which includes $27 million for community infrastructure investments and $24 million for NWT Housing Corporation projects.

As in previous years, the Capital Estimates, 2018-2019 do not include appropriations for housing infrastructure proposed by the NWT Housing Corporation in 2018-2019. The appropriation for all these investments will be sought during the Legislative Assembly’s review of the 2018-2019 Main Estimates. However, the NWT Housing Corporation’s Capital Plan, 2018-2019 is included in the Capital Estimates as an information item.

Major highlights include:

• $115 million for highways, winter roads, bridges, and culverts. This includes funding of $67 million for the Tlicho all-season road project and $30 million for Building Canada Plan projects;

• $44 million for health facility replacements, renovations, and equipment, including funding of $30.1 million for the Stanton Territorial Hospital Renewal project;

• $27.2 million to continue to provide funding to community governments for their infrastructure needs;

• $13.6 million for new and enhanced information technology functionality and upgrades;

• $10.7 million for new education facilities and renovations to existing facilities; and

• $8.8 million for deferred maintenance and energy upgrades to existing GNWT assets.

In addition to the capital funding provided to community governments from the GNWT, in 2018-2019 community governments will also be receiving $16 million in Gas Tax funding and $20.4 million from the Clean Water and Waste Water Fund.

Including the funding that is going to community governments, total infrastructure spending in the NWT for 2018-2019 is therefore estimated to be approximately $349 million.

That concludes my opening remarks, Mr. Chair. I would be pleased to answer any questions committee members may have. Thank you.

Thank you, Minister. We have agreed to begin with general comments. Does the Minister of Finance wish to bring witnesses into the House?

I do, Mr. Chair.

Thank you. Sergeant-at-Arms, please escort the witnesses into the Chamber. Thank you. Would the Minister please introduce your witnesses.

Thank you, Mr. Chair. Mr. Chair, to my right I have Mr. David Stewart, who is the deputy minister of Finance, and to my left I have Mr. Sandy Kalgutkar, deputy secretary to the FMB.

Thank you, Minister. I will now open the floor to general comments. Mr. O'Reilly.

Thanks, Mr. Chair. First off I'd like to thank the Minister of Finance and his staff for the work that has gone into the capital budget, but I do have some concerns.

I guess a couple of matters in terms of what's in, or what's perhaps not in, the budget. First off, I couldn't find any discussion about the fiscal responsibility policy in the document, and specifically there is a set of calculations that the department goes through to sort out what the envelope is that's available for capital expenditures, and I didn't see those calculations in here, either. I think this has been raised with the department in the past, but I think it would be appropriate to have a section in the Infrastructure Acquisition Plan that discusses how the budget complies with the Fiscal Responsibility Policy and shows us the calculations for what that envelope looks like. I understand that we may get some additional information on that before the conclusion of our consideration of the capital budget.

The second item that I want to raise is the Northwest Territories Power Corporation. Now that the corporation has moved really from being more of an arm's-length body to something that is almost in-house, with the board of directors being deputy ministers, I think it is far more appropriate that the Power Corporation be considered in the capital budget, much the same way that the NWT Housing Corporation is, in that it is here as an information item, that there is additional information available to Members to better understand the capital projects that the corporation intends to undertake, and so on. I think that is just a more transparent way of proceeding, and certainly in line with the reorganization with the Power Corporation. I would request that the Minister include that sort of information in next year's capital budget and provide it to Members. In addition, for this year's budget, I would certainly like to see a lot more information about what the Power Corporation is doing and spending.

Now, I would like to move on, Mr. Chair, to some comments about the budget itself, the capital budget, and of course, budgets are always about setting priorities. I think there is no better place to see what a government's priorities are than to look at how it intends to spend its money.

The single largest expenditure in this budget is a $67 million allocation for the Tlicho all-season road. Before anybody tries to say that I am for or against the road, that is not what this discussion is about. It is about spending priorities. If we are going to find that money within the capital budget, it has to come from somewhere, or something else is probably slipping off of the table somehow. I do have a number of questions that, as we work our way through the various departments, I will be seeking more information about to try to understand where the money was found to fund the $67 million that will go towards the Tlicho all-season road in this year's capital budget.

As I understand, when I look at page 3 of the capital budget, there are some significant changes in the capital estimates for this year, even compared to the revised estimates for last year, particularly with three departments: Education, Culture and Employment, the spending has declined from $29 million to $11 million this year; Environment and Natural Resources, from around $11 million last year to about $3 million this year; Health and Social Services, about $45 million down to about $14 million. I am sure there are some good explanations for those changes in spending from one year to the next. That is the sort of thing I guess I want to key in on, and whether, indeed, any projects that these departments have been delayed or put off define money for the Tlicho road. I guess that is where I am going to be going with that, is to just understand if other matters have been delayed or pushed back to provide money for that particular project.

I will also have some questions around the long-term care facilities that are proposed in the capital budget and why Hay River was chosen as a location in the South Slave, and where that might leave people who require long-term care in Fort Smith and perhaps other communities in the South Slave.

I will have some questions for the Department of Justice on the status of the ever-elusive resource centre. MACA provides a lot of funding to community governments for their own capital projects, and while last year we seem to have made some progress on the infrastructure gap for communities, I am not sure what the case is this year. Also, in terms of moving towards a different funding model that is based on communities' needs, I am not sure what progress we are making in that regard as well.

I also see that the NWT Housing Corporation spending is continuing to decline, and I will have some questions about that.

On the Department of Infrastructure budget, I will have some questions around progress on the Yellowknife Airport capital plan and the committees that the deputy minister is supposed to be setting up. I also have questions around whether there is any capital support for Yellowknife Visitor Services.

I believe those are all of the comments that I have to my opening remarks, Mr. Chair. Thank you very much.

Thank you, Mr. O'Reilly. Would the Minister like to respond?

Yes, thank you, Mr. Chair. I am not sure if you want me to respond to each Member individually, or if you want me to just wait until the end of all of the general comments and then I can respond to them as a whole, but whatever committee wishes to do is fine by me.

In that case, we could wait until the end. All right. Next we have Mr. Testart.

Thank you, Mr. Chair. Some of my comments will be similar to my colleague's, the honourable Member from Frame Lake.

On the issue of the Power Corporation, the Power Corporation is now a de facto government entity, and I am not sure why. We have been told before, when this question has been probed, that the committee can make special arrangements to have the Northwest Territories Power Corporation appear and present its capital estimates and speak to any specific projects.

I think this is additional work, given that this is not an arm's-length entity anymore. The board is now made up of deputy ministers. I believe the chairperson is here in the Chamber today, Mr. Chair, and the public accounts have also been changed to reflect that NTPC is now, in fact, part of the government's reporting entity. Given all these things, I think it is inappropriate to continue to insist that the Power Corporation be held to a different process. I encourage the Minister to make changes to future capital planning as long as the status of NTPC remains equivalent to the current conditions.

I also have concerns about the capital budget as a whole. I acknowledge that the capital planning cycle exists for a reason, but even given this, the House approves budgets and appropriates money for specific purposes as contained within those estimates. We are also bound to follow policy and legislation that indicates how those budgets are presented and how they are adhered to. In the case of capital, we adhere to the Fiscal Responsibility Policy to ensure that our capital expenditures are pegged to our operational surplus, but we approve capital budgets a year ahead of approving the budget that contains that operational surplus, which leaves us in a curious situation where we are approving capital budgets based on a Fiscal Responsibility Policy that limits our expenditure to those surpluses that are based on projections and not based on what the House appropriates. Again, the House appropriates money for specific purposes, and that is done through votes.

In approving this budget, which I am expecting we will do, perhaps not completely as it is listed today, it is based on a projection. It is not based on a concrete surplus. I think that creates challenges for what this Fiscal Responsibility Policy really means. It is not reported unclearly. If there is a difference between the two budgets that we will only find out until next year, the difference is made up through supplementary reserve spending and other fiscal authority.

Given that, what is the point of having it if we can make it work whenever we need to correct a deficiency within the Fiscal Responsibility Policy? This is just a paper policy. It's so complex that it obfuscates the work we do here, which is giving these budgets proper assessment and ensuring that money that is appropriated is appropriated for specific purposes and those purposes are met by the government. I think we need to take a look at this, a more detailed look, perhaps behind the scenes, but certainly it's worth mentioning now that we've had a couple of kicks at the can on capital estimates.

That being said, I support much of what is being suggested for appropriation here and I will have specific questions for departments, but those higher-level questions of what to make of the Power Corporation not being contained in these estimates; what to make of the Fiscal Responsibility Policy when it's not being clearly articulated, just exists in the background and it seems to be flexible when necessary and rigid when not. That policy also limits our capital expenditures, which means that we have a fixed amount of money to work with each time around.

There may be times when capital needs are required above and beyond operational expenditure, so it is in a way a policy that binds the Assembly in how it appropriates money. I would appreciate if the Minister and his witnesses, at the appropriate time, can speak to some of these concerns and make it clear for members of the public how this policy works and how it leads to not only the stated objective of fiscal responsibility but also how it supports transparency.

My final point on the introductory page in the Main Estimates, page 2, the introduction, the first bullet point of the priorities that this budget supports is "increasing transparency and accountability and strengthening consensus government." If the Minister could explain how this budget does that, I would be appreciative of that, as well. Thank you, Mr. Chair.

Thank you, Mr. Testart. Next we have Mr. McNeely.

Thank you, Mr. Chair. My opening comment to the proposed capital budget at hand is minimal. Coming from a remote area of the Northwest Territories, we're quite drawn to the only industry in town, or the only industry in the area, which is the government itself, and without capital planning allowances for increase of commerce and employment and training opportunities in our area it becomes even more limited. With the departure of industry we are primarily focused on the projects our government is actually doing for the area to stimulate.

In the capital plan we have a facility going into one of the communities, and if we're going to draw and attract professional people in isolated, remote areas we need upgraded and up-to-date facilities for them to feel comfortable in a surrounding on the worksite, as well as living accommodations that are suitable to the needs of long hours he or she has worked in that profession.

Given those factors and the needs of our areas, I see this budget as modest. It's enhancing leverages at the federal level to maximize on capital availability. Last year, and again this year, we're quite happy to see a number of minor -- some larger centres might call it minor, but in the community of Deline, which has really maximized their programs to fix their streets and roads is remarkable when you look at the end product and the distribution of benefits during the construction of that landmark.

I say to myself when I go there, you've got a nice dust-controlled road, and recap the individuals on the achievements that they've done. They don't see it from this side of the building, they see it from the end user at the community level, and they're quite happy with those smaller projects. It's a good feeling to see that there's a government that is really trying to accommodate the little, medium, and larger centres. Given consideration of those principles, I'm happy to go through the capital discussions with some questions, not any contentious ones. Mahsi.

Thank you, Mr. McNeely. Next we have Mr. Vanthuyne.

Thank you, Mr. Chair, and I, too, want to start with thanking the Minister for the presentation on the capital plan that is before us. I also want to take this opportunity to congratulate, in fact, the government on a couple of projects that were seen as very critical to the territory that we wrapped up in last year's capital plan, and that's the Inuvik to Tuktoyaktuk Highway, which is essentially pretty much done, and then also the Mackenzie Valley fibre optic line. Two very important projects to our territory and to the vitality of our territory, and I want to congratulate the government for making those investments and completing those projects.

From a perspective of my own riding, I have to give some thanks to the government for ongoing commitments and investments in Highway No. 4, which is inclusive of Ingraham Trail, and a number of the improvements that they've made out there, as well as the improvements that they've made on the entrance coming in to the city for public safety concerns that I had raised over the past couple of years. Some of those improvements are still ongoing, and I look forward to seeing them completed.

Mr. Chair, by and large I look at capital budgets as a great opportunity to support our small communities. As we heard from my colleague from the Sahtu, it's an opportunity to create some stimulus within the smaller remote regions, it's an excellent opportunity for job creation, and, frankly, it's sustainable investment for the communities.

We know that this year's budget is all-inclusive of about $350 million, but the challenges that we're looking at is that a lot of that is already committed money. A significant portion of that is carried-over funding, so those are projects that are already under way.

Also another significant part of that is internal funding that is for the government itself to make improvements. An example is the IT investments and the functionality in IT, so it really it doesn't leave us much as it relates to new money being invested in projects that can help build job creation and sustainability in the communities.

If you look at it in that context, it's a little bit concerning. We would certainly want to see a lot more investment put into job opportunities and creating opportunities for small business and economic development in the smaller communities with capital projects.

The other concern I have when we don’t have that much new money being invested is the ongoing discussion around our government's known infrastructure gap. It is very large and continually growing, and it seems to be that, with having limited new capital investment, we're not doing much as it relates to trying to overcome this infrastructure gap, so I am a little bit concerned on that level, again, that the infrastructure gap is just going to continue to grow and that we are not putting meaningful investment to trying to limit its growth and/or reduce it in any way, shape, or form.

Mr. Chair, one of the things that I will support, as previous colleagues spoke about and I have spoken about a number of times, is that it is just simply time for the Power Corporation to start to come and present to the Legislative Assembly and the Members of the Legislative Assembly through the annual business planning cycle, both the capital and the main estimates, to just come and start putting their business cases before us so that we do not have to put the lines of questioning that we have with regard to dissolving boards or whether it is increased power rates or whether it is delayed generators or the like. These are the kinds of things that can be done in camera, in a confidential setting, as are current plan reviews with all other departments. I would strongly suggest that this government support that approach and have the Power Corporation, once and for all, start to report its annual business planning to this government.

One of the other things that I have to raise is the federal government's commitment now that we are starting to see with regard to investing in Canada. It is going to be a fairly large and significant pot of money, $570 million over an 11- or 12-year commitment, which is good. I mean, this is a good amount of money to see. It is going to come in a number of different pots. We will see public transit. We will see investments in green spending, in social spending, of course in rural and northern communities, as well as just economic development investment.

It still has a lot of challenges. I guess it is not fully clear how we are going to get our hands on all of this at this point. Some of it might come in the form of regular transfer funding, some through application programs, some through the Canada Infrastructure Bank and these other means. I guess we will just have to see over time how we are going to be able to access these funds. However, along with it comes a little bit of uncertainty. We are challenged all the time in the North with regard to capacity to be able to deliver on a lot of our own projects and a lot of our own spending. We see a lot of our larger employers struggling with the same issues. You know, getting $570 million over 11 years is going to be a challenge for this government, not only in finding capacity to deliver it, but it is going to be in finding the right O and M capacity to be able to support it thereafter.

I think lastly, Mr. Chair, if there is something that I might just want to add in the process, it is that, when we go through this process of planning capital, one thing that I think is a critical piece of information and a tool that is important for at least Regular Members to have is the five-year capital plan.

We do get to see the 20-year needs assessment kind of plan, but to be able to get our hands on the five-year capital plan so that we can narrow down exactly what it is that our government is looking to invest in is important for us in order to have full meaningful participation in the conversation, that we get our hands on the five-year capital plan so that we can contribute at a better level with regard to input on the capital projects that are forthcoming and being proposed. For now, Mr. Chair, those are really all of the introductory or general comments that I have with regard to the capital budget. I look forward to going through the process. Thank you.

Thank you, Mr. Vanthuyne. Next, we have Mr. Blake.

Thank you, Mr. Chair. I just have a few general comments. We are glad to have some spending in my riding in the budget, but we are always hoping for more projects, large-scale projects like a new school, for example. I am a bit disappointed that, after six years of hearing Moose Kerr was going to be up for a major retrofit or replacement, all we have is a few repairs to the existing facility, hazmat portables removed, site planning for crush work and landscaping, and a new playground. That did really shock me when I saw this.

There is also a huge need, too: while our children are out playing during recess, there is no fencing around the school. Our children are playing in the streets, Mr. Chair. It is really unsafe. It is an accident waiting to happen. I am not sure if it is too late to add something in there for fencing, but it has always been a challenge, especially with parking on the streets around the school. We have people, our teachers and visitors, who park right on the street, and it has always been a hazard. You never know when a child is in between those vehicles and could run out into the street into oncoming traffic. It is really unsafe and needs to be addressed.

It was supposed to be, as I mentioned, all the time that I have been here, in the six years, it has been flagged in the red flag list and it has been up for capital assessment. I am hoping next year that we could at least squeeze it in. To me, I am not sure if it is part of their reduction plan or what is going on, but, as I mentioned, I was disappointed.

Also, we have a new facility that will be coming in at James Creek, and I am glad to see that. Hopefully, we could negotiate with the Gwich'in. You know, it has always been common practice that our government usually provides a list to the Gwich'in Tribal Council let them know what is available in the coming year to possibly negotiate. You know, it has always been common practice in all my time sitting on the board of directors. Hopefully, that continues.

Also, all the work to the Dempster, even the Minister was telling me he is getting a lot of compliments about the Dempster. Compared to the Yukon section of the highway, it is like night and day. As I always mention, we have really good crews that maintain our road, even though it is a gravel road.

I thought about it this summer; I know there has been a lot of concern about the highway here, and how much it has changed over the years. It is the same as the section between Tsiigehtchic and Inuvik. If you look at the Dempster with a set of binoculars, you could see the same slumpage we have on this highway coming out of Yellowknife, but you just do not notice it because you are on gravel. I do know that, coming next year, we will have the widening starting from Tsiigehtchic towards Inuvik, so I am sure in the next few years we will straighten that road out, as well.

Just comparing each riding to another, we are always here for the best interests of our constituents and the territory as a whole. I am looking forward to the day that we announce full construction of the Mackenzie Valley highway. It has always been brought up at my constituency meetings that we need to be connected, as well, from Inuvik. I know a few years back the focus was more to Norman Wells, but we have to start thinking ahead of here and connecting up to Inuvik.

I always compare our territory to other territories and provinces. A good example is in the Yukon. Almost all of their communities are connected. It is great for tourism. They even have hydro right from Dawson to Whitehorse, which is over 500 kilometres. Those are the possibilities that we have here in the territory, and we have to start taking advantage of that. Bringing down the cost of living as well. We will not see all the positive things once that investment is made, because right now, you might not realize it in the South, but living out in our region, and because I am in Tsiigehtchic, I see all the traffic that goes to Whitehorse, especially during Christmas and during the summer when people go on holidays. All that money that is going to the Yukon, it could be staying here in our territory. We have people, whether it is buying boats, skidoos, and trucks; all that is going to a different territory, here.

I think it is time that we hopefully secure that funding through the federal government, and start that road as soon as possible here. It will only bring good things to the territory and open up our other resources that we have throughout the territories, as well.

That is some of the comments that I had here. I could write a book here, but I will just leave it at that. Thank you.

Thank you, Mr. Blake. Mr. Beaulieu.

Thank you, Mr. Chair. Mr. Chairman, I think during this review I need to touch on a few of the projects. I think they are in the books. I think they are moving forward, and I think we have some of them on record. My objective, I think, is to give comfort to individuals in the communities that have been asking for the various items that do not appear in this year's capital plan, but there is some planning going on that advance some of these projects.

I am looking, for sure, for one of the big items that is not in the capital plan except possibly a study which does not really secure the capital plan, I have discovered, but the Kaw Tay Whee School in. It is something that I think, when the department comes up, I would like to explore. I think the Minister has made a commitment to do the planning study, but I am going to just drill down a little bit more on a project such as that.

A very similar situation with the health centre in Lutselk'e. I know that, again, the community themselves had asked for the project, the school could be advanced ahead of the health centre, and all of that was occurring over the last few years. Now again I want to give comfort to the community that, once this big project of rebuilding the schools is done, the workers and all the training they have done in there will have another project, at least another project to work on.

I think there is a lot of work being done by the department working with the Detah education authority to look at providing a gym for their school, a proper gym for their school, and that is something, again, I would like to discuss more when the department comes up, and also an adult learning centre.

I think that we need to look at the more contribution type of funding in capital. The capital infrastructure does not have any money for contribution. I always felt that the Community Access Road Program was something that was very valuable to the community in many, many ways. I know that 10 years ago, when I started as MLA, I was campaigning when people were telling me that one of the things that I should really be talking to the government about should I be elected was an all-season road to a place called Austin Lake out of Lutselk'e. I have talked about it quite a few times, and I think there is money flowing in there now. Now, we need to figure out the time frame in which we would like to bring this project in. It is also on the way by Snowdrift River, which is I think a river that has great potential for hydro, mini hydro. That is, I think, something we need to hash out and give assurances to people that these things are still something that we are working on a government.

I think, when we do spend our capital money, we need to do that so that the majority of the benefits start to flow to local and northern businesses. Recently, there have been businesses right here in Yellowknife that indicated they are taking losses in projects that have been delivered by the government, our government, and it appears as though we have gone so far into the deal that there is nothing we could do to, no leverage, I should say, because of legal matters or whatever matters that stand in the way of trying to resolve issues for local businesses who are big employers of individuals in the community. Of course, by community, I am talking about Yellowknife in this instance.

It has not just occurred once. This occurs frequently, where our businesses establish long-term businesses established in the NWT, go into work for companies that are working on behalf of the GNWT building infrastructure. They end up, at the end of the day, some of the businesses take losses, and when they turn to the only place they know, the only reason they got into business is because it appeared to be a government project, we then turn around and tell them that we are not in a position legally, contractually, or whatever the reasons, not in the business to help them.

I think that, as we launch into this next round of capital starting sometime in the next fiscal year, we put some safeguards in there for our people. I think it is important if we can build a huge piece of infrastructure that benefits whichever community that we are building it in, but on the way there, we knock off a couple of our own companies that are here in the North. That leaves a sour taste in people's mouths on getting into GNWT funding projects. I think that should be something we should try to safeguard against.

Finally I want to talk a bit about the highway going into Fort Resolution. I was driving into Fort Resolution on the way in there. I ran into an individual in Fort Providence, and he said to me, "Have you driven that highway since they started sealing the latter sections of it?" I said "I hadn't. That was my first time in there in a couple of months." He called it a "super highway." It is interesting because, when you drive that highway, it is like a super highway. That really good work. I believe that was a negotiated contract with a company that was employing the majority of the people out of Fort Resolution as operators and drivers and everything. That is probably the best highway I have driven on within the NWT.

I think that we have to continue to look at negotiated contracts and find a way that we can do that. This kept the money in the NWT, it kept the money in the community, and it produced a beautiful product. I do not think that this government can just say no all the time to negotiated contracts, and that we are not in a position to negotiate contracts. There are a lot of benefits to negotiated contracts. The people know it, and the community knows that there is a lot of benefit to it.

I think that is something, again, that we need to start looking at. I think the Minister, when he answered a couple of questions from me, said that this negotiated contract may have been something that had been dealt with before this government. I do not know. I think it was during this government, but there is a really good procurement method. For me, I thought that that was the way to go. There are a lot of benefits to it and a really, really good product. I thought that was something that the government should consider moving forward when we are rebuilding highways. Thank you, Mr. Chair.