The point I tried to make yesterday in my response to the budget is that the federal government is looking at us the way they look at other jurisdictions, from a fairly narrow perspective, and all they see is that we are very dependent on the federal government and we receive, comparatively, a good chunk in transfer payments but we still maintain relatively low taxes. They don't see the tax burden, which was the argument that we made a thousand times. Mr. Nielsen can do the tax burden argument backwards and forwards in seven languages. They also don't see that in the long term, unless you do something that will improve our economy, we will progressively get more dependent on the federal government. I wonder if the Minister could share with us any new approaches that he is going to bring to bear on the federal government on this issue. We used the best experts in the country but federal Finance was adamant that we had to bring our level of taxation up to a provincial standard. I wonder if the Minister could share with us any new approaches in this area, if you are not giving away any negotiation secrets.

I appreciate that response because I think that with new climate in Ottawa, hopefully, the federal Finance department won't be quite as rigid as they have been in the past. I just hope that the Minister continues to pursue other avenues that I think would be more progressive and would be less onerous than the payroll tax.

I have another question. The Minister is renegotiating the formula financing agreement, and one of the problems that, as I recall, we had in the formula financing agreement was that even with our low corporate income tax, which I guess was the lowest and now is second or third lowest, there was still no net gain if a company decided to move their headquarters or, in the case of a big company, their financial assets, on paper, anyhow, to the Northwest Territories. Because of the formula that any increased taxes wouldn't directly come to us, as I recall it. I think it was Marconi, at one point, that moved quite a sizeable pool of money up to the Northwest Territories. Now, though there are difficulties and there are always jealousies with other jurisdictions, is there any effort being made by the department to try to deal with that sort of area whereby we could actually attract pools of capital to the Northwest Territories and take advantage through our tax system of those pools?

I am fully aware of the rationale that the Minister used. I still don't agree with. It seems to me, though, that when we are talking to the federal government, there are some obvious barriers for us to achieve our objectives in a more rational way. I see why the Minister took this route because, at that point in time, there weren't those other alternatives for him to accomplish the ends that he wanted. It seems to me, for instance, that we have a very favourable personal income tax. If there are barriers for people declaring their income tax in the Northwest Territories as opposed to a jurisdiction with a much higher personal income tax, I would like the Minister to explain what those barriers are. If there are barriers, it seems to me that would be a logical approach with the federal government. Let's review those barriers. If the federal government really believes in the free flow of capital and people across Canada, then it would seem to me that they couldn't have a moral objection to people paying their personal income tax in the Northwest Territories if they work in the Northwest Territories, and if it is cheaper for people it seems to me that it would be to their advantage to do so. Thank you, Mr. Chairman.

I know the Minister knows the frustration that small businesses have with the GST. There is one school of thought, that the GST was really the straw that broke the camel's back as far as kick-starting the underground economy. In one way, many small businesses consider the payroll tax to be sort of a northern equivalent, added on top of the GST. I really hope that the Minister takes advantage of any opportunities that come our government's way to find a less onerous way, and a way with less administrative hassles, to accomplish the objectives of this government.

It might well be, and I'll ask the Minister this question, in the next year or so if an opportunity comes about, would the Minister at that time consider reviewing the payroll tax? If there is a more appropriate way of achieving some of those objectives, would the Minister consider getting rid of the payroll tax and using another avenue?

I have a question on the payroll tax. I think the Minister knows my feelings about the payroll tax. As the Minister of Finance, I refused to put it in even though there was a request from the Standing Committee on Finance. But, nonetheless, it's here. I wonder, because of some of the irritants in the payroll tax, especially for small businesses, when the federal government said they're trying to move towards the harmonization of the tax system throughout Canada, is there any opportunity to do something to combine the payroll tax with some federal tax? Is there any way we can do something to lessen the actual paper work involved in administering this tax?

Thank you, Madam Speaker. Not only do I say that at this point in time we should support the Finance Minister, but we should also recognize that the Finance Minister and the government may need some flexibility three or four months down the line.

Right now, there seems to be agreement between the western provinces to hold firm on tobacco taxes and to try to control smuggling. But in three or four months down the line, it might be that the pressures are too great and that coalition breaks apart. I think at that time, everyone will have to recognize that if everybody else falls like dominoes, we'll probably have no alternative down the line but to do the same. But I firmly believe that the decision taken by the government right now is the right one, and I fully support it. Thank you very much.

---Applause

Thank you, Madam Speaker. I rise today to support the position taken by the government, as outlined by the Minister of Finance on tobacco taxes, yesterday.

---Applause

I am sure that there will be many critics of the decision. I am sure the smokers of the Northwest Territories are going to see their fellow and sister smokers smoking at half price across the country. I am sure there will be those who say we won't be able to control smuggling in the Northwest Territories. But I think the decision was the correct one for three reasons.

The first reason, as outlined by the Minister of Finance, is health. We not only have a high percentage of our population smoking in the Northwest Territories, more so than anywhere else in the country, we have a higher percentage of our young people smoking in the territories than anywhere else in the country. The first time we had a noticeable decrease in smoking among young people was when we raised the taxes on cigarettes.

The second reason is that, the nature of this deal, which was a bilateral deal between the federal government and Quebec, solved the problem in Quebec but created a whole series of problems across the country. We have some problems with how our confederation works when that is the approach.

The third issue is that of finances. The Minister, quite rightly, pointed out that $2 million in revenue that we'll lose, but in the long term there's a much more significant financial cost. Right now, we are blessed by having a young, relatively healthy population and our health costs in the Northwest Territories are a lot less than in many other jurisdictions.

But that won't always be the case. All these young people, eventually are going to be middle aged people like many of us, and old people like some of us. At that time, we will really see the real cost of increased smoking now. There will be such a significant jump in our health care costs, 15 or 20 years down the line, that I don't think we'll be able to absorb that cost.

Madam Speaker, can I seek unanimous consent to continue my statement?

Thank you, Madam Speaker...and he talks to a packed house.

---Laughter

I have looked forward to responding to the budget speech as a Member of the Legislative Assembly. I feel it is an important opportunity for MLAs to present their views about government policy and direction.

I have heard criticism in the past that the Standing Committee on Finance report was either based too much on constituency concerns or too personalized in its approach. Members of the committee agreed that this committee report would be based on broad policy themes, and we hoped that it would result a in productive debate and tangible results. The government would acknowledge the concerns of Members and would be able to articulate their direction and strategy in a way that would gain Assembly and public support. That is what a budget debate is all about.

Successful governments build a broad base of consensus, lay out a clear philosophy and strategy. New Brunswick is a good example. Frank McKenna knows exactly where he is taking his province. He has found a niche where he can build on his province's strengths. A well thought out strategy puts together the many pieces of a complex puzzle that leads to economic revival. It includes high technology and the information highway, tax regimes, education, training, welfare reform, brilliant salesmanship, a totally positive message and great political skills. I think the NWT has a lot to learn from New Brunswick. If we are able to rise above our own differences, we would have a great package to sell.

The budget before us presents many good concepts. We have a hard-working Premier, even though she seems a bit defensive at times. She still has considerable public popularity. She is even more popular than Bob Rae in Ontario. We have a very competent Finance Minister, and when I just listened to the federal budget, he seems to have done a pretty good job in protecting the interests of the Northwest Territories. We have a number of energetic and capable Ministers who do have the ability to get things done. The Standing Committee on Finance wants the government to succeed and we are confident that our suggestions will help the government succeed.

In a nutshell, here is my view of what the Standing Committee on Finance is saying to the government. The government must clearly state its main priorities and devote the energy and resources in the time remaining to a manageable number of key objectives.

Secondly, the central agencies have perhaps become too powerful and the important checks and balances between line departments and central agencies have been reduced. I feel that the real policy-making and political strategy role of the Cabinet and its Ministers has been inevitably diminished as a result. Ways should be found to open up the system to better encourage innovation and exchange of ideas, while keeping the positive aspects that reorganization has brought in making the organization more cohesive.

It is very difficult for Cabinet to focus on priorities, policies or political ramifications when they collectively plough through a large agenda. Most governments set up specialized Cabinet committees to deal with these issues. For example, there could be a political strategy committee consisting of the House Leader and two Ministers. The support staff could be the Secretary to the Cabinet, the Principal Secretary, the Legislative Coordinator and the Press Secretary, or whatever combination the Premier is comfortable with, to meet once a week and plan political strategy for Cabinet decisions dealing with the House, the standing committees and with the public. I think with that sort of committee we wouldn't have the problem we had with the labour study.

Right now, mining is a hot subject. Perhaps there should be a committee chaired by the Minister of Energy, Mines and Petroleum Resources, with the Minister of Intergovernmental and Aboriginal Affairs, the Premier and the Finance Minister, to ensure that the inevitable conflicts are ironed out and aboriginal groups are kept involved, that the environment is protected and that the strategy fits into the overall strategic objectives of the government.

Income support reform, housing and education are all examples of where there could be committees but, again, it is very important that the government decide its priorities and then spend their energy concentrating on those priorities.

The financial picture over the last two years has been a lot better than the worst-case scenarios that were tossed around, however, the Finance Minister has done a good job in protecting our overall surplus, and I am sure that he will attempt to continue with that trend. I think everybody here must recognize, though, that our future fiscal position is very vulnerable and everyone must realize that as the federal government tries to wrestle down its debt and its deficit, it will become increasingly challenging to maintain our present financial situation. Outstanding issues such as health costs, housing cuts, pay equity, land claim implementation and the cost of division could play havoc with our fiscal situation. The Standing Committee on Finance has said and reiterated in this report that all outstanding financial issues should be brought together in one coordinated package, and sold to the federal government as a means to lessen our dependence on Ottawa to provide political and fiscal stability in the period leading up to division and beyond.

Right now, housing is in a crisis situation and the Standing Committee on Finance agrees that the government should deal with it as a priority item. We feel that the Housing Minister has tried his very best up until now to address the problem, but we feel that it is probably time that he needs the housing issue put into the package with the full support of the Government Leader and the Cabinet, if he is to be successful.

In the long term, we feel very strongly that education must be

the number one priority of government. Our recommendation, as the standing committee, of making excellence the philosophical underpinning of education, we believe will lead us to provide an education system second to none for all of our students. They have to be competitive with anyone, anywhere, in a rapidly shrinking world.

The recommendations made by the Standing Committee on Finance should be viewed as positive input and a strong indication that Members want the government to succeed. At the end of this term, all Members will be judged, not by government reorganization, not by strategies or studies, but by concrete results. There is no doubt in my mind that the present government is operating in an extremely difficult political and financial climate, nationally as well as in the Northwest Territories. Sometimes I don't think that reality has sunk in. Division itself poses a monster challenge. Regional aspirations, self-government negotiations and treaty negotiations all complicate the political landscape. I feel we must get our act together and resolve our regional differences. In the future, both east and west must speak with one strong voice and provide a practical and cost-efficient form of government in each territory that can protect the interests of northerners in an increasingly competitive and unsympathetic world.

The federal government must recognize that Northwest Territories defies all comparisons with the rest of Canada. We administer one third of the country. Nunavut and the new western territory will probably be the last two new political jurisdictions created in this country's history. We are leaders in the world in circumpolar relationships and language legislation. We are, by far, the most enlightened, in forging new relationships between native and non-native societies. It may not be enough for many people in the north, but for the first time in the history of this country, aboriginal people form a majority in a Canadian Legislative Assembly and a Canadian Cabinet and today sit as equals at First Ministers' conferences, at Ministers' conferences and in the boardrooms of corporate Canada. We are the guardians of a treasure house of renewable and non-renewable resources, diamonds, fur, fresh water, oil and gas. More importantly, we benefit from the culture of proud aboriginal people who have lived here for centuries and have much to teach Canada about life and about living.

The north defines Canada, the splendour of its beauty, the diversity of its cultures and the promise of its future. Surely the federal government must see that we are different. We can't be lumped into a narrow Ottawa perspective. The real issue isn't that the $963 million we get from Ottawa is too much. The real issue is that it only costs each Canadian $34.74 a year to look after one-third of Canada, a little more than a carton of cigarettes in Quebec and a little less than a carton of cigarettes in Yellowknife. An empire for $34.74 a year. We can tell Mr. Martin that he has himself one heck of a deal. Thank you very much.

---Applause

Thank you, Mr. Chairman. Just to be a bit more specific, though, one of the definitive objectives of Intergovernmental and Aboriginal Affairs is to conclude a negotiation of a devolution free memorandum of understanding. This is sort of the framework within which most, if not all, devolution initiatives will fall. This discussion, as the Minister knows, has gone on for a long time. The actual wording of the definitive objective is to "conclude negotiation." Does the Minister feel that there is a will within the Department of Indian and Northern Affairs? Is their new mandate, at this point, clear enough that the Minister is able to say with some degree of certainty that there is some realistic hope that this sort of agreement can be concluded, if not in the next year, at least within the life of this government?