We will take a short break and begin with Bill 2, Supplementary Appropriation Act, No. 3, 2007-2008.
The Committee of the Whole took a short recess.
I’ll call the Committee of the Whole back to order.
As we agreed prior to the break, we’re going to continue with Bill 2, Supplementary Appropriation Act, No. 3, 2007-2008.
At this time I would like to ask the Minister responsible for the bill, the Hon. Mr. Roland, to give us his opening remarks and introduction of the bill.
Thank you, Mr. Chairman. Supplementary Appropriation Act, No. 3, 2007-2008, requests authority for additional appropriations of $21.305 million for appropriation expenditures and $7.951 million for capital investment expenditures in the 2007-2008 fiscal year.
To clarify the contents of the bill, of the $21.305 million in operations expenditure appropriations requested in the supplementary appropriation, approximately $1.9 million is offset by federal revenues. That includes $1.4 million for municipal rural infrastructure funding.
Of the $7.951 million in capital investment expenditures requested in the supplementary appropriation, $4.5 million is offset by revenues, $1.7 million is in municipal rural infrastructure funding from the federal government and $2.7 million is from Canada Infoway Inc. as part of the Canadian Electronic Health Record System project.
Major items included in this request for the operations expenditures are as follows: $5.3 million associated with hospital and physician services to N.W.T. residents receiving services outside of the N.W.T.; $2 million across departments to fund increased utility costs related to government operations; $1.6 million for increased expenditures for supplementary health benefits, including extended health benefits, indigenous health benefits and Metis health benefits; $1.6 million for additional costs incurred for dental premiums and medical travel assistance payments on behalf of G.N.W.T. employees; and $1.2 million for additional costs related to the Territorial Power Subsidy Program.
Also of note on the operations side is a net increase of $2.8 million for the environmental liability associated with government infrastructure as a result of 11 newly identified sites as well as a re-evaluation of some previously identified sites.
That concludes my opening remarks. We’ll be prepared to answer questions Members may have. Thank you.
Thank you, Mr. Roland. At this time I’d like to ask the Minister if he’ll be introducing any witnesses.
Yes, Mr. Chairman.
Does the committee agree that the Minister brings in his witnesses?
Agreed.
For the record, would you please introduce your witness, Mr. Premier.
Mr. Chairman, joining me at the table is Ms. Kathleen LeClair, the secretary to the FMB.
Welcome, Ms. LeClair.
At this time I’d like to ask the Members if they have any general comments in regard to the supplementary appropriation.
Thank you, Mr. Chair. I just wanted to make a couple of general comments on the Minister’s opening remarks.
Since I’ve been here I’ve seen a few of these sups come forward. I’m just a little concerned that when they do their actual budgeting exercise, it seems that they come back for some extra funding that wasn’t asked for before. I’m just hoping that this is not an indication of not budgeting properly or waiting for a lot of the actual costs to come in before they realize they’ve budgeted wrong. I’ve seen it happen in a few other cases, where numbers are being budgeted, and when it comes down to the actual, we seem to be…. The estimates seem to come in a lot less than what it’s actually costing us. I just hope this is not a trend.
I understand there’s some stuff that we just can’t get away from. There are emergencies and a few other things that weren’t foreseen when they were doing the actual budgeting exercise. I just wanted to make a few comments to that effect, Mr. Chairman. Thank you.
Mr. Chairman, the area of the supplementary appropriations is something that is, as well, shared, in the sense of the concern the Member has raised.
As this government starts its work, this is the first supplementary appropriation for the 16th Legislative Assembly. The process we’re moving forward with is that the supplementary appropriation would be used for emergencies, unforeseen events that departments were not able to plan for.
As we begin our business planning process, we’re working with departments to ensure that they build into their business plans the appropriate dollars for running initiatives that have been identified. We’re looking to reduce the use of supplementary appropriations in the future.
Mr. Chairman, a couple of things pop out for me. The first one is the $2 million across departments to fund increased utility costs. Not unrelated, the second one is $1.2 million for additional funds going towards the territorial power subsidy program.
I think we have big opportunities for energy savings and doing things in a better way that’s both cheaper and beneficial to our environment. I, of course, have been bringing some of those ways forward, and I know the Premier and his cabinet are aware of those. But I think it highlights, as well, some of the infrastructure, like the mini-hydro run-of-the-river projects that are small-scale, appropriate to the small communities and most beneficial to them.
A little bit of upfront pain can give really long-term gain financially as well as in these other areas of social and environmental benefits. So I’m hoping to see those sorts of things in the future. I realize this is just a supplementary budget, but these things do pop up.
Mr. Chairman, the area the Member has identified is of growing concern, I guess, is a fair way to put it. We’ve had to identify additional costs throughout the year. Some of that is because, as we have told departments, they need to eat some of those costs and encourage energy efficiency. As well, as Members are aware, the fluctuating price of oil across the country and the nation also has a direct impact on ourselves and the departments. So we’ve had to make these types of adjustments.
The Territorial Power Support Program, as the Member has touched on, is a concern to us as well, as we continue to top up that budget item as we’re forced to deal with the increased costs of utilities across the Territory.
Mr. Chairman, I just have a couple of comments. This is a new process for me. This is the first sup appropriation that I have seen, and I want to echo the comments of my colleague Mr. McLeod, in that it seems to me that many of these expenditures in this supplementary appropriation should have been foreseen, particularly the utility costs. I don’t think it was a surprise to anybody. A year ago I think we should have been able to know that our utility costs were going to increase, and they should have been budgeted for.
There are a couple of other things in here, as well. From what I see in this appropriation, it’s expenses which are necessary, but I again reiterate that they should have been foreseen. I would hope and I’m glad to hear the Premier say that in going forward, our budgets will hopefully be a little more accurate, that we will have fewer supplementary appropriations and that, if I heard him right, they will be for emergent items as opposed to ongoing O&M. I’m glad to hear that.
My belief is that we should budget the way we would in our personal lives for our own household expenses: you set a budget and you spend the money to the budget limit. And when that’s gone, you don’t spend any more.
Mr. Chairman, as I’d stated earlier along the lines of this area of the use of supplementary appropriations, it will be something that, as the 16th Assembly, we will have to work with, to work around reducing the use of these items. It would be, as well, Members who would help in that in the sense of policing the use of that by continuing to send the message back through Ministers and departments about proper planning. The fact is that, in our current fiscal situation we have to come to the realization that there’s only so often you can go back to the well before the bucket comes back dry.
We have a lot of new Members here. I’d just like to remind the Members that you do have ten minutes to ask questions and make a general comment, and also within your ten minutes you can ask more than one question. You’re not limited to one question. You have ten minutes. I just wanted to throw that out there.
General comments? If there are no more general comments, would the committee like to proceed?
Agreed.
We’re now on tab 2. I believe we’re starting on page 5: Legislative Assembly, Office of the Clerk, not previously authorized: negative $47,000. Does the committee agree?
Legislative Assembly, Operations Expenditures, Office of the Clerk, negative $47,000 approved.
Legislative Assembly, not previously authorized: negative $47,000. Agreed?
Total Legislative Assembly, negative $47,000 approved.
Page 6, Executive Offices, Executive Operations Expense, not previously authorized: $981,000. Agreed?
Executive Offices, Executive Operations Expense, $981,000 approved.
Total Executive Offices, not previously authorized: $981,000. Is the committee agreed?
Total Executive Offices, $981,000 approved.
This binder should be on your desk. We are on tab 2, page 5. We’ve dealt with Legislative Assembly, Operations Expenditures. We just went through the Executive Operation Expense. We’re on page 6. Are you ready to continue on?
We’re on page 7. Human Resources, Executive continued, Operations Expense, Directorate, not previously authorized: negative $185,000. Agreed?
Human Resources, Executive continued, Operations Expenditures, Directorate, negative $185,000 approved.
Human Resources Strategy and Policy, not previously authorized: $187,000. Agreed?
Human Resources Strategy and Policy, $187,000 approved.
Employee Services, not previously authorized: $1,579,000. Are we agreed?
Employee Services, $1,579,000 approved.
Total Human Resources, not previously authorized: $1,581,000. Are we agreed?
Total Human Resources, $1,581,000 approved.
We’re now on page 8, Aboriginal Affairs and Intergovernmental Relations, not previously authorized: negative $28,000. Agreed?
Aboriginal Affairs and Intergovernmental Relations, negative $28,000 approved.
Total Aboriginal Affairs and Intergovernmental Relations, not previously authorized: negative $28,000. Agreed?
Total Aboriginal Affairs and Intergovernmental Relations, negative $28,000 approved.
Financial Management Board Secretariat, Directorate, not previously authorized: negative $119,000. Is the committee agreed?
Financial Management Board Secretariat, Directorate, negative $119,000 approved.
Government Accounting, not previously authorized: $3,962,000. Agreed?
Government Accounting, $3,962,000 approved.
Total Financial Management Board Secretariat, not previously authorized: $3,843,000. Agreed?
Total Financial Management Board Secretariat, $3,843,000 approved.
Total Department, not previously authorized: $6,377,000. Agreed?
Total Department, $6,377,000 approved.
Page 10, Finance, Operations Expenditures, Directorate, not previously authorized: negative $32,000. Agreed?
Finance, Operations Expenditures, Directorate, negative $32,000 approved.
Total Finance, not previously authorized, negative $32,000. Agreed?
Total Finance, negative $32,000 approved.
Page 11, Municipal and Community Affairs, Operations Expenditures, Directorate, not previously authorized: negative $72,000. Agreed?
Municipal and Community Affairs, Operations Expenditures, Directorate, negative $72,000 approved.
Community Operations, not previously authorized: $1,441,000. Agreed?
Community Operations, $1,441,000 approved.
Lands Administration, not previously authorized: $30,000. Agreed?
Lands Administration, $30,000 approved.
Mr. Hawkins.
Mr. Chair, we’re on page 11, yes? Thank you. Just to make it firm. I couldn’t hear you.
I have a concern to the Premier, or I should say the Finance Minister, on the way we fund projects. In this particular case we have a transfer of infrastructure contribution funding to capital investment expenditures.
What it is, is the money that goes to the Nahanni Butte gym. Before we get too far, I want to firmly state that I’m in support of their project. It’s the process that we go about this in transferring O&M to capital dollars and then transferring it over.
Mr. Hawkins, I don't believe we've gotten to that item yet. It’s under Regional Operations. We're still dealing with Land Administration. It’s further down the list, under Regional Operations, if you can hold your question until we get to that line item.
Sports, Recreation and Youth, not previously authorized: $425,000. Agreed?
Sports, Recreation and Youth, $425,000 approved.
Regional Operations, not previously authorized: negative $575,000. Mr. Hawkins?
Thank you, Mr. Chair. I don't get fresh time on the clock, it appears.
First, as I said earlier, I just want reaffirm that I’m in support of the project. I'm just not supportive of the process of how we do this.
We're supporting a project by putting money into an O&M fund, and then we're allowing it to be transferred over to capital. And it just sounds like a funky or a wonky way of doing the process. We should be up front.
O&M should not be funding capital projects. The spirit and the intent of this all along is to ensure that the community of Nahanni Butte has a gymnasium. Again, I am in support of the project, but the fact is that I don't like the process.
I'd like the Premier to go on record as to why this is the case. Would he be willing to switch it over to what I would consider to be a normal process, where all capital projects flow through a capital process?
Mr. Chairman, the process that’s used has been used for quite a number of years. It is a common process that we use, even when we go into the business planning development stage and to the main estimates that this House would deal with, with projects that fall into the Municipal and Community Affairs area, where the asset that is being constructed becomes property of the community.
This is a result of direction that was given from the Public Sector Accounting Board in 1997 on the way governments deal with their capital assets, and that is when we came into the amortization era of government and how we do business. We’ve implemented those changes through our accounting structures, and it goes back to the area of who owns the asset when it’s completed.
In this case, it only happens with Municipal and Community Affairs because the asset will not be owned by the Government of the Northwest Territories. It will be owned by the community.
Mr. Chairman, the issue of the community owning the asset is not the issue. It is simply how we define projects through a funding process. Regardless of whether the community of Nahanni Butte gets it through the O&M or just a cheque directly from the Finance Minister, I don’t really care, to be honest.
The fact is that we’re funding this project up front before we’re even given a capital project, and on top of that, we’re building a capital project with O&M money. I don’t like the principle of the process that we’re going through. And I wish to put it on the record that I don’t think it’s appropriate that we fund projects before we get them in this way where we just give them all the money and say, “go ahead.”
This is a project for this community. And it wouldn’t change the process if we paid in milestones like we did with any other project. We make the money accessible so it could be drawn down. Again, it wouldn’t change the support of the project, in my view, and it would ensure that we deliver the project, in the fact that we get the asset when they get all their money at the same time. Otherwise, it looks like we’re paying people up front and saying, “good luck — give us a gym.” It makes it difficult for us to bear down pressure if something goes funny.
It’s more of a comment as opposed to a question for the Finance minster, but I’m more than willing to hear his response, assuming he wishes to respond. Like I say, it has nothing to do with being critical as to the project, just the process.
Mr. Chairman, again, the process is one that has been used for a number of budget cycles now. I’ll have to correct that: it’s not only the Department of Municipal and Community Affairs that has done this. The Department of Education, Culture and Employment also has infrastructure contributions, and that would be, for example, the schools and the education authorities here in the capital.
Mr. Chairman, the Finance Minister may be technically right, but in no case should we be funding capital projects, in my view, out of O&M money. It just sounds funny. When you go to read it up in the books to find out where the gymnasium is in a potential budget, you’re going to go to the capital budget.
The last thing I’ll say is that just because we do it this way and we’ve done it this way for a long time doesn’t mean it’s right. And just because we do it this way all the time, every time, we’re never going to get a different answer or a different process.
I think our process would be better, further enhanced and a little more transparent from the public’s point of view and their expectations on how we approve projects if it was done this way. That being said, it’s a loan position. That doesn’t mean it’s not right either.
I guess, for the record, the Member says it is not right. In fact, it is not wrong. This is following the Public Sector Accounting Board and how we deal with our capital and its amortization. This also has changed since we’ve gone to the New Deal with communities, where the capital program has in fact been transferred.
There are a number of smaller communities that are still in settlements that are an exemption to that, and there are a few projects that didn’t get wrapped into the original transfer. We’ll see less of these in the future.
Regional Operations, not previously authorized: negative $575,000. Mr. Hawkins.
