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Question 88-18(3): Resource Royalties In 2018-2019 Main Estimates
Oral Questions

The Speaker Jackson Lafferty

Masi. The question has been taken as notice. Oral questions. Member for Kam Lake.

Question 89-18(3): Mineral Resources Act
Oral Questions

February 12th, 2018

Kieron Testart Kam Lake

Thank you, Mr. Speaker. Earlier today the Minister of Industry, Tourism and Investment made a Minister's statement, and I will quote from it: "Royalties directly impact the profitability and viability of resource development projects in the NWT" and that, "further, we will not be reviewing our resource royalty regime as part of the work on the proposed act."

One of the stated public goals of the act is to create a cutting‑edge mineral resources regime in the Northwest Territories. If royalties affect our competitiveness so much, why is the Minister indicating that we are not going to address that? Thank you.

Question 89-18(3): Mineral Resources Act
Oral Questions

The Speaker Jackson Lafferty

Masi. Minister of Industry, Tourism and Investment.

Question 89-18(3): Mineral Resources Act
Oral Questions

Wally Schumann Hay River South

Thank you, Mr. Speaker. As I stated before in this House around the Mineral Resource Act, there are a number of complex issues that we are moving forward working with intergovernmental council on these issues. The question about resource revenue coming into the GNWT was asked yesterday. This is a very complex issue, as I've stated in this House, and it needs a whole-government approach, and along with intergovernmental council, we have decided to defer that to a later date. Thank you, Mr. Speaker.

Question 89-18(3): Mineral Resources Act
Oral Questions

Kieron Testart Kam Lake

When is that later date?

Question 89-18(3): Mineral Resources Act
Oral Questions

Wally Schumann Hay River South

If I had a crystal ball, I would let the Member know the exact date, but I suspect it will be in the next Assembly.

Question 89-18(3): Mineral Resources Act
Oral Questions

Kieron Testart Kam Lake

I'm just going to remind the Minister that the GNWT is in a revenue crisis right now, a massive shortfall that is unpredicted at this time around. It seems like now is the time to do it. Will the Minister reconsider that in light of a significant shortfall in revenues?

Question 89-18(3): Mineral Resources Act
Oral Questions

Wally Schumann Hay River South

I take a little offence to the Member's comments. We are in support of the mining industry in the Northwest Territories. This is our biggest revenue generator. It employs probably the largest number of people outside the bureaucracy. As I stated yesterday in this House, this is a very complex issue. People focus in on the resource royalties. There's much more than that, that these mines contribute to the Northwest Territories, social economic agreements, land taxes, IBAs, gas taxes, employment. This is a whole-government approach, and it has to be something that's taken seriously, and we will look at in due course in time.

Question 89-18(3): Mineral Resources Act
Oral Questions

The Speaker Jackson Lafferty

Oral questions. Member for Kam Lake.

Question 89-18(3): Mineral Resources Act
Oral Questions

Kieron Testart Kam Lake

Thank you, Mr. Speaker. I, too, support the mining industry. I don't think my question was insulting. I think what's troubling is that the Minister won't present those significant contributions to our government's revenues and our economy in a transparent annual mining report. Will the Minister commit to putting those facts on the table in an annual report so we can stop having this debate and properly acknowledge the contributions of the mining sector to our economy? Thank you, Mr. Speaker.

Question 89-18(3): Mineral Resources Act
Oral Questions

Wally Schumann Hay River South

The Member has his own take on how we're moving this forward. As I've said, the mining industry is the biggest part of our economy. We will continue to support it on this side of the House. Some Members on that side maybe don't clearly want to support it, but we do. Our approach is, we need to support the sector that contributes the largest part of our economy. We will continue to do that, and working with the intergovernmental council moving forward, along with Members of this Assembly and the public, we will move these things as a time as needed. We are working on a Mineral Resource Act at this time. Thank you, Mr. Speaker.

Question 89-18(3): Mineral Resources Act
Oral Questions

The Speaker Jackson Lafferty

Oral questions. Item 8, written questions. Item 9, returns to written questions. Item 10, replies to the Commissioner's opening address. Item 11, replies to budget address (day 3 of 7). Member for Frame Lake.

Mr. O'Reilly's Reply
Replies to Budget Address

Kevin O'Reilly Frame Lake

Merci, Monsieur le President. I will use my reply to the budget address to set out some of my thoughts on the following, as I did last year:

• A quick summary of the 2018-2019 budget and fiscal context;

• A review of what I recommended in my reply to the 2017-2018 budget address;

• A description of the process for the 2018-2019 Budget and how it might be improved; and

• The good and the bad of the 2018-2019 Budget as proposed by Cabinet.

I'd like to start with:

Summary Of The 2018-2019 Budget And Fiscal Context
Mr. O'Reilly's Reply
Replies to Budget Address

Kevin O'Reilly Frame Lake

Let there be no mistake, Cabinet continues to cut programs and services to fund surpluses that are being used to pay for large infrastructure projects such as the $67 million in 2018-2019 for the Tlicho all-season road. The promised spending in the last two years of our mandate is not happening. For example, there is no new funding for the arts or increased investment in renewable energy.

There is very significant financial uncertainty on the horizon, as cannabis revenues and expenses are not included in this budget. There is nothing on carbon pricing, and there will likely be a need to match some federal infrastructure funding opportunities that may mean an increase in our debt wall. One of the solutions that both sides of this House may agree on is the need to change the Territorial Formula Funding Agreement to allow us to keep more of our own source revenues to build economic sustainability.

Revenues are down by $84 million. I think the public would be shocked to learn that we will raise more money from tobacco taxes ($16 million) than we get from resource revenues ($13 million). There have been no serious efforts by Cabinet to stabilize and increase our own source revenues. So much for the promise of devolution where our government would do a better job managing resources than the feds. After almost four years post-devolution, not one word of the mirror legislation or regulations has been changed. We can and should be raising significantly more from mining, as shown by two independent experts who have recently examined our revenues from this sector. As alluded to earlier today, maybe we need an independent review of economic rent from mining. A review of mining royalties has also been put off to some unspecified future date and is very unlikely to be completed within the life of this assembly, as confirmed today by the Minister of Mining. Why should the federal government give this government any more authority over lands and resources when we haven’t done anything with the authority we already have?

Lastly, the quality and inconsistency of the departmental budgets or business plans vary widely. Many contained almost no actual details on activities for 2018-2019, virtually meaningless performance indicators and questionable risk profiles, making our review very difficult at best. Cabinet Ministers need to pay much closer attention to their business plans, appropriate for the rationale and justification of a business case for the investment of public funds.

What I Recommended From The 2017-2018 Budget
Mr. O'Reilly's Reply
Replies to Budget Address

Kevin O'Reilly Frame Lake

• Opening up the budget process to greater public scrutiny. I am pleased to say that the opening remarks of the Minister of Finance on the fiscal context were delivered in public, and I believe all sides would agree that was a useful exchange and in the public interest. I cannot report any progress on the development of a process convention for the budget.

• I recommended that there be a formal public engagement process for the 2018-2019 Budget. This was not done, and there doesn’t seem to be any appetite to do it in the future. We may have to wait for the next Finance Minister.

• During the three budgets I’ve been involved in, I’ve recommended that there must be a serious effort to raise new revenues. I am sorry to report that there are again minimal efforts to raise any new revenues in this budget, other than a commitment to further study a land transfer tax and a tax on sugary drinks, as was promised last year. Perhaps most disturbing, Cabinet and the Finance Minister have not even chosen to do a factual investigation of the possibility of increased revenue generation from royalties and taxes. As I mentioned earlier, they won’t even improve the debate with facts.

• Unfortunately, I have to report that the better cross-referencing of the main estimates to the business plans and staff reconciliations are still not found in the main estimates or the business plans.