Minister of Finance.
Thank you, Mr. Chairman. I’ll speak to the borrowing limits and I’ll get Ms. Melhorn to speak to the shared services piece.
Our position in regard to the borrowing limit has been clear and consistent. We’re involved in a government-to-government negotiation and discussion with the federal Finance department. There’s been a review of the three territories’ borrowing limits. This is an issue of specific concern to us so we’ve been very proactive in dealing with the federal government. We’ve had meetings just before Christmas when we were in Kananaskis, a chance to talk to the Minister of Finance. I informed committee of this. The Minister indicated that they would like to see this issue resolved by spring. In our last conversation with Minister Flaherty he indicated that they’re still committed to doing this, and hopefully would now be down to a number of weeks. We have offered up a number of suggestions and had discussions at the staff level on what’s the best way forward and what’s been contemplated by the federal government.
At the same time, months ago now, there was a process started by the Member of Parliament that through the Private Member’s Bill process that as it’s gained traction and made its way through the rather difficult process for Private Member’s Bills, it’s garnered a lot of attention by the press. When federal Parliament discusses the northern borrowing limit, it focuses a lot of attention and the question kept being posed to us is what is our position. Our position has remained the same, that we are intent on concluding an agreement with the federal Finance department on a borrowing limit, the final details of which have not been agreed to, but the intent is clear on our part and I know the Member of Parliament, as well. I mean, he’s focused the attention on the borrowing limit but our process is on a government-to-government basis with the federal Finance department and we anticipate, and the Minister of Finance anticipates, that our discussions will be concluded far before the Private Member’s Bill runs its course.
I’ll ask Ms. Melhorn to speak to the shared services issues. Thank you.
Ms. Melhorn.
Thank you, Mr. Chair. The Financial Shared Services Project has been going on for some time. Most of the work at this point has been fairly level and behind the scenes work on the governance model. So how the Shared Services Centre would be governed in terms of the reporting relationships with the departments that it would be serving, working on partnership agreements so that it would set out the service levels that would be provided to departments, and the accountability structures and reporting relationships. What we’re working on right now is developing a detailed inventory in conjunction with the departments of the various tasks that are being performed in departments and by the staff in departments so that there can be an assessment of which tasks are appropriate for the Financial Shared Services Centre and which ones would remain in departments. But no decisions have been made about staffing. We’re not at that point yet. We have made an effort to maintain regular communications with staff through Messenger and information in the Bear Facts about where the project is at. Thank you.
Mr. Abernethy.
To the borrowing limit, the Minister indicated that we’ve made lots of suggestions to the federal government with respect to our thoughts on the borrowing limit. I’d be happy to hear what some of those suggestions were. With respect to the Shared Services Centre, I’ve been reading the Bear Facts so I knew those were going on, but I know there are some people out there who are confused or they’re not as comfortable, and if there’s anything we can do to give those staff some more assurances of where we are, it wouldn’t go amiss. Anything we can do to help ease some of the anxiety that’s out there will only be better for our employees and better for the government in the long run. Anything you can do to, sort of, enhance awareness would be great. Once again, with respect to borrowing limit, the suggestions that the Minister had mentioned, I’d be happy to hear what those are.
Minister Miltenberger.
Mr. Chairman, there are two main areas of discussion. We have suggested how our debt is treated is the debt that is what is called self-financing be treated differently from our normal borrowing practices. By self-financing debt, of course, we mean the money that is owed by the Power Corporation and the Housing Corporation and the bridge when it comes on-line will be mainly self-financing. That is one area. The other issue and area of discussion is going to be when you have a number, is it better to have a specific dollar number in legislation or an agreement or is it better to have a formula that doesn’t tie you to a number that can be overtaken by inflation and other factors? We are looking at those are the two key areas that we are having those discussions on. Thank you.
Thank you, Minister. Does committee agree that that concludes general comments?
Agreed.
Then we will start with detail. Does committee agree?
Agreed.
You can turn to page 5-7, department summary. We will defer that until we conclude detail, so we can turn to page 5-8, information item, infrastructure investment summary. Agreed?
Agreed.
We are moving on to page 5-9, information item, revenue summary. Mr. Bromley.
Thank you, Mr. Chairman. I am mystified, probably not unexpectedly, with finances by the corporate income tax. It is projected to be extremely low, something like one-third or less of last year. Giving that our underground mining is in full swing in the diamond mine, diamond prices are at a record high, exploration has rebounded in something like 300 percent or more since the last fiscal years, compared to the previous one, I am sure there is an explanation for this. Why are we projecting such a low corporate income tax revenue for 2011-12? Once again, are they treated even better than people allowing to adjust their corporate declaration of corporate taxes and income to lower their taxes looking ahead and not behind, something like that? Thank you.
Minister Miltenberger.
Mr. Chairman, there are two main reasons these numbers are built on the 2009 tax year when we were in the midst of the significant economic downturn. The Member is correct; they have an ability to reach back three years, as well, when they are doing their taxes to work out the most advantageous arrangement to themselves. Thank you.
Mr. Chairman, thanks to the Minister for that confirmation. I think we have often commented on the volatility of our corporate income tax and the difficulty it poses for us. I suppose it would be too much to ask to deal with it and do in those rules and regulations that allow them to manipulate their income in order to have income tax minimized and create this sort of volatility. Thanks.
Mr. Chairman, we work closely with the federal government in terms of estimating and the targets that are set and we have a standard approach that is agreed to by jurisdictions across the country for the benefit of consistency and certainty. Thank you.
I guess our high volatility is certainly consistent over the years. I recognize, though, that there is probably not much we can do about this unless we ever get serious about corporate financial regulations on Wall Street, so I won’t go any further on that one.
I do want to note, though, Mr. Chairman, that I recognize we have lost $3.5 million in revenue last year and this fiscal year as we give up the power subsidy dividend that we always collected to the Power Corporation. It is just a note. I will leave it at that. Thank you, Mr. Chairman.
More of a comment. We are on page 5-9, information item, revenue summary.
Agreed.
We are moving on to page 5-10, information item, active position summary.
Agreed.
We are moving on to page 5-12, deputy minister’s office. Mr. Bromley.
Thank you, Mr. Chairman. I am just wondering. The GNWT’s share of the cost of operation of the corporation, $38.9 million, is that because the corporation does not take in sufficient to cover its costs?
Ms. Melhorn.
Yes, Mr. Chairman, this is the operating contribution that the Government of the Northwest Territories provides to the Housing Corporation.
Mr. Chairman, I am just wondering; as I noted on the previous page, we have gifted the corporation with $7 million and I don’t see any reflection in GNWT share of the cost of operation of the corporation. I wonder if the Minister could explain that discrepancy. Thank you.
Mr. Minister.
Mr. Chairman, this particular item I believe it says it is in relation to the Housing Corporation, not the Power Corporation.
Mr. Chairman, that explains it. Thank you, Mr. Chairman.
We are on page 5-13, activity summary, deputy minister’s office, operations expenditure summary, $66.122 million.
Agreed.
We are moving on to page 5-14, activity summary, deputy minister’s office, grants and contributions, contributions, $61.175 million.
Agreed.
We are moving on to page 5-15, information item, deputy minister’s office, active positions.
Agreed.
We are moving on to page 5-17, activity summary, fiscal policy, operations expenditure summary, $1.289 million.
Agreed.
We are moving on to page 5-18, information item, fiscal policy, active positions.
Agreed.
We are moving on to page 5-21, activity summary, budget, treasury and debt management. Mr. Bromley.
Thank you, Mr. Chairman. I just noticed quite a leap of something like 500 or 600 percent on contract services. I am wondering if we can get an explanation of that. Thank you.
Mr. Minister. Mr. Koe.
Thank you, Mr. Chair. That’s for an additional insurance broker and property appraisal services required through a contract. Thanks.
Mr. Chair, if I could just get an explanation of what’s exceptional about this year for that expenditure.
Mr. Minister.
Thank you, Mr. Chairman. We’ll commit to get that information for the Member.
