What I am getting at is that we are always saying that we are going to support Aboriginal and northern business, and here we are once again. This is a Crown corporation under the auspices of the Government of the Northwest Territories, and we are paying $16 million for the assets of Northland Utilities in Hay River. I find that is, for clarity, not our mandate, and we are setting a precedent. The next time, over here, when the Yellowknives want to get out of it, we are going to start that here, too, with Northland Utilities? I know they just signed a five-year deal because I keep track of everything that comes through here. When its time is up, you are going to pay how much there for that asset. You are going to go more in the hole, and you are still not going to pay lower power rates. I don't know how you think, physically, but that is not a way business will be run. No business, private business, will run like that. Just because it's government, you can go around and do these, make these crazy transactions, and it's okay. That is not transparency. That is not clarity. That is not accountability. Thank you.
Debates of Feb. 8th, 2021
This is page numbers 1799 - 1842 of the Hansard for the 19th Assembly, 2nd 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
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Caroline Wawzonek Yellowknife South
Sorry, Madam Chair. It's simply to say that, obviously, this is really a matter that should go to the Northwest Territories Power Corporation, to the Minister responsible for the Power Corporation to speak to, whether or not there is anything to be taken from the approach here, whether there is any change in future approaches. However, with respect to the borrowing plan here, as I say, it's really just reflecting the projects, including the Hay River project but not exclusive to the Hay River project, and showing the impacts that that has on the total borrowing plan of the government. I am not really best placed and am hesitant to speak for my colleague. No doubt my colleague is listening, Madam Chair, and hopefully more thorough responses can be provided to the MLA in due course. Thank you.
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Kevin O'Reilly Frame Lake
Thanks, Madam Chair. Yes. I, too, am concerned about the NTPC bond issuance. This is new debt. I know that we ran into a problem last year where bonds were issued for new debt and Regular MLAs didn't really feel that we had been properly informed that it was going to be through a bond issuance, so I appreciate the increased transparency with the borrowing plan this year. How is a member of the public supposed to understand what this bond issuance is really for the NTPC? Is there a publicly available list of what these assets or what this capital stuff is supposed to be? Thanks, Madam Chair.
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Caroline Wawzonek Yellowknife South
Thank you, Madam Chair. I anticipate we certainly could get some further information. It really is reflective of the capital plan of the NTPC so, to the extent that that capital plan is being approved and has been approved and is available publicly, then that would demonstrate what projects are under way and planned for the Northwest Territories Power Corporation. By utilizing the GNWT to support the issuance of bonds and their borrowing, they are saving I believe upwards of several million dollars because of the ability of the Government of the Northwest Territories to have a better rate, so that is the benefit of doing a bond issuance. Thank you, Madam Chair.
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Kevin O'Reilly Frame Lake
Thanks, Madam Chair. Is there a long-term capital plan for the NTPC or an asset management plan or something? Last year, they got $40 million in repayable bonds. This year, it's $105 million. It's jumping around. Is there a long-term capital plan, and if so, can the Minister provide that to us as Regular MLAs? Thanks, Madam Chair.
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Caroline Wawzonek Yellowknife South
Thank you, Madam Chair. Yes, absolutely there is, and we'll certainly provide that.
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Kevin O'Reilly Frame Lake
Thanks, Madam Chair. I appreciate that commitment, and it would be great if that kind of information could be made available to the public, as well. The loan guarantees line toward the bottom of this page, can someone explain what that is about? Thanks, Madam Chair.
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Caroline Wawzonek Yellowknife South
Thank you, Madam Chair. I'm pretty sure I asked the exact same question, and I asked it to the deputy minister. If I could perhaps impose on him to answer the Member, please.
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Kalgutkar
Thank you, Madam Chair. The previous practice was for NTPC to undertake their own borrowing for their capital plan, and the Government of the Northwest Territories would guarantee that debt. Because it was proved to be more beneficial for the government to issue borrowing on behalf of NTPC, because we are allowed to then pass those savings on to the rate base, we started undertaking that borrowing on their behalf, starting, as Members know, last year. That's really the old borrowing based on previous practice. Thank you, Madam Chair.
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Kevin O'Reilly Frame Lake
Thanks, Madam Chair, and thanks for the response. I, too, want to speak to the Fiscal Responsibility Policy. I'm not sure that it really captures what happens with P3s in an adequate way because, as I am starting to understand a bit better, a lot of the P3 expenses and really long-term debt are being sort of taken out of the long-term borrowing plan and put in as operational expenses through the annual payments we have to make for the operation of the facility that are going to go on for 33 or 35 years, or whatever is left in the contract. I'm not trying to ascribe motives or blame or anything, but it just seems to be a way of changing long-term debt into ongoing operational expenses, which eats into our ability to spend money as part of our O and M budget. How does the Fiscal Responsibility Policy really account for P3s, and is it time that we really looked at the Fiscal Responsibility Policy to make sure that it includes this diminished capacity to spend money on O and M? Thanks, Madam Chair.
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Caroline Wawzonek Yellowknife South
Thank you, Madam Chair. The Fiscal Responsibility Policy really doesn't speak to operations and maintenance budgets of any of the infrastructure projects that are at issue. It speaks to the funding of the infrastructure project itself, so it wouldn't be reflected in the operation of the asset, whether that is a P3 asset or otherwise. Obviously, it seems that perhaps there needs to be a further briefing or discussion around the Fiscal Responsibility Policy and what it includes, but the fact that it doesn't include the operations of an asset that happens to be a P3 is not, I would suggest, the area of issue or the area of concern to be focused on because that is not its intention. Thank you, Madam Chair.
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Kevin O'Reilly Frame Lake
Thanks, Madam Chair. Like my colleague from Yellowknife North, I believe that the potential for P3s is starting to create an incentive to do large infrastructure projects in that way so that we take some of the long-term debt off the books, so to speak, and put it into long-term contracts that affect our capacity for O and M spending. I do think it's starting to create an incentive do to that, and I'm not sure, with all of the criticism that there has been in the past in other jurisdictions about P3s, that that's a great way to proceed.
I do think I want to take the Minister up on that opportunity to have a briefing on the Fiscal Responsibility Policy and look at it more closely, but I want to go to the total consolidated borrowing. It looks like it's $1.59 billion at the end of this upcoming year, and that is getting, to me, pretty close to the debt limit of $1.8 billion. We're going to exceed that in a future year if we stay on this track. I guess I'm worried about what would happen if we had unforeseen circumstances around forest fires or something. We're going to exceed this long-term borrowing debt perhaps as early as this year or maybe next year if there were some unforeseen circumstances. Do we actually have a longer-term plan to not exceed the debt limit, and if so, what is it? Thanks, Madam Chair.
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Caroline Wawzonek Yellowknife South
Thank you, Madam Chair. No, we're not projecting to hit the borrowing limit this year or next year, and the reality is that there is a lot of projections in here that continue to be fairly conservative, not the least of which is the revenue projections. For example, the performance of our corporate sector or our industry sector, whether it's royalties or whether it's corporate taxes, we do tend to take a fairly conservative approach in terms of the projections. I am not concerned about hitting the borrowing limit here. The other side is, of course, there are contingencies built in both to the borrowing limit and contingencies built into, if I'm not mistaken, the Department of ENR, for example, around better ways to protect the ability to protect forest fires and other potential natural disasters. No one could have expected COVID-19, for instance, and that certainly has had an impact, and yet, especially with support from the federal government, the overall spending on COVID-19 has been one that has been manageable. It's my expectation that that approach will continue, that the contingencies built in and the approach built into making estimates and projections is conservative enough that we will not be hitting that borrowing limit this year or next. Thank you, Madam Chair.