The Standing Committee on Government Operations recommends that the Government of the Northwest Territories make GNWT's inventory of contaminated sites available online modeled upon, and with a level of disclosure comparable to, the Federal Contaminated Sites Inventory maintained by the Treasury Board of Canada Secretariat.
Fiscal Responsibility Policy 15.03
The GNWT's Fiscal Responsibility Policy (FRP) was first established in 2005 as a policy of the Financial Management Board and later reissued as a Cabinet-approved policy. The purpose of the FRP is to ensure that the GNWT plans for and achieves sufficient operating surpluses to finance annual infrastructure investments and meets debt servicing payments on any amounts borrowed. This requires the government to adhere to the following parameters that are set out in the policy:
- Affordable debt (including debt associated with P3 projects): Non-consolidated debt servicing payments (defined as principal repayments together with debt interest, plus any incidental costs associated with administration of the debt) shall not exceed 5 per cent of total non-consolidated annual revenues; and
- Infrastructure financing (excluding P3 projects): Government will restrict infrastructure investments, as follows:
- a minimum of 50 per cent from the operating surpluses generated within the non-consolidated (Section II) public accounts; and
- a maximum of 50 per cent from government debt.
As a result of pressure by the standing committee, Finance now reports annually, in the Financial Statement and Analysis part of Section 1 of the public accounts (page 34), on how the GNWT has performed with respect to the numerical parameters set under the FRP.
The GNWT concludes that it has met the parameters of the FRP for the 2016-2017 fiscal year. With respect to affordable debt, Figure 2 reveals that debt servicing costs of $11 million, as compared with non-consolidated revenues of $1.857 billion, meant that the GNWT's debt servicing payments amounted to 0.59 per cent of total revenues, well below the 5 per cent threshold.
With respect to infrastructure financing, it is less easy to discern how the GNWT has met the requirements of the FRP. While the policy requires that a minimum of 50 per cent of infrastructure investment be funded from non-consolidated operating surpluses and a maximum 50 per cent from government debt, the GNWT concludes that "[t]otal operating cash required of $141 [million], compared to total operating cash available [of] $244 million, resulted in an excess in cash generated of $103 [million]."
The committee believes that the Minister of Finance would be the first to agree that the GNWT does not have excess cash at its disposal, which makes the conclusion reached in this section of the public accounts somewhat misleading. The FRP requires the government to generate an annual non-consolidated operating surplus to fund infrastructure development, but the amount of surplus in excess of the government's investment needs is of less importance to the committee, and hence to the public, than whether or not the surplus generated is sufficient to fund a minimum 50 per cent of investment costs.
With respect to reporting on the FRP, the committee is pleased to see that the chart presented in Figure 2 identifies where in the public accounts some of the key figures may be found that are used in determining the government's compliance with the policy. The committee would like to see the source identified for all of the figures noted in the chart, so that these calculations may be independently verified, an important aspect of public accountability.
The committee also notes that on page 30, in the Financial Statement Discussion and Analysis, Finance reports that the "government's debt servicing payments to total revenue has increased slightly from 1.48 per cent in 2015-2016 to 1.75 per cent in 2016-2017." The report notes that the government's Fiscal Responsibility Policy was met by having these debt servicing payments not exceed 5 per cent.
The committee found this narrative to be somewhat confusing, given that the 1.75 per cent figure differs from the 0.59 per cent figure noted in the chart on page 34, Section I. However, the section on page 30 also notes that the increases relate to the consolidation of the NWT Hydro Corporation in the public accounts. This suggests that the 1.75 per cent figure refers to the entire government reporting entity and therefore to the consolidated debt servicing payments, rather than the non-consolidated debt servicing payments referenced in the FRP.
The committee raised this with the Comptroller General, who agreed that if the committee is correct in this understanding, then the FRP does not apply to the consolidated debt servicing payments and should not be referenced in this part of the narrative.
Overall, the committee is pleased with the progress made by Finance in its reporting on the Fiscal Responsibility Policy and challenges the department to strive to improve upon this reporting by considering the committee's observations. Accordingly, the committee makes the following recommendation: