Debates of June 6, 2006 (day 6)

Thank you, Madam. Chairman. If we can have the Minister of Transportation respond to that. He, I believe, has more detail. Thank you.

Thank you, Mr. Roland. Minister McLeod.

Madam Chair, this year we had unusually warm weather and it really caused a lot of problems in the area of building the roads in the North Slave region, especially to the communities of Wekweeti and Gameti that required us to do some extras in the actual construction of the roads. It required lighter equipment because of the very thin ice. We had to get lighter equipment that was not in the contract and we also had to…In a number of cases, the rivers or the creeks started flowing so we had to go back and reconstruct some of those roads, or in some cases provide detours. This was all over and above the standard contract and we did have success in getting the communities resupplied, but we had costs that were over and above what was included in the actual contract and we had to have our own maintenance crews out there in a lot of cases. We had to pay a lot of overtime because of the amount of time they were required to spend out there maintaining and ensuring the road was safe and providing the detours and constructing, in some cases, new roads because of the washouts.

Thank you, Minister McLeod. Mr. Villeneuve.

Thank you, Madam Chair. I’m just having a little hard time in trying to understand here. If I can ask the Minister, won’t lighter equipment be a lot cheaper than heavier equipment, especially where ice road maintenance is concerned? Wouldn’t renting a quad with a plough on the front as opposed to a grader be a lot cheaper if it requires that? Also, in the shortened ice road maintenance season, wasn’t there any savings realized from that at all that could be applied to this over-expenditure? Thank you.

Thank you, Mr. Villeneuve. Mr. McLeod.

Madam Chair, the season was, in some communities, Wekweeti especially was pretty well basically the same as what we had historically. Gameti and Wekweeti of course usually have a shorter season than other communities anyway, but this year we had problems constructing the road to the community because of the warm weather and it didn’t change the fact that we still had to have equipment out there for the whole period, because we started constructing the roads the same time as we start construction. Every year we start in January if we had our equipment out there and we had the contractor in place and beginning to start construction. So it doesn’t change. The equipment still has to be out there; we still have to have people out there and this year we had to have extra resources allocated to the road, we had to have lighter equipment. I think they’re called Haglunds that we had to bring in that we don’t normally use, but because of the thin ice we had to have lighter equipment. This is over and above the contract. It was an extra and we also had to have more people working longer hours over weekends and that created overtime requirements. So there was really no savings by not having the road open for a specific period of time. We still had to have all our equipment out there and even more so this year because we needed specialty equipment to start working on the thin ice and being able to meet the resupply requirements of the communities. It would have, I guess it resulted in a lot of savings because we weren’t required to fly any of the fuel in; we weren’t required to fly any of the resupply in. We did have to have more equipment on the ground and we had to have more people out there and longer hours, but it resulted in us being able to resupply the communities.

Thank you, Mr. McLeod. Back, then, to the bill as a whole.

Agreed.

Agreed, thank you. Does committee agree that Bill 1 is ready for third reading?

Agreed.

Agreed, thank you. Bill 1 is now ready for third reading.

Now onto Bill 2. I would like to ask Minister Roland, then, did you already give comments on this one? Oh, you would like to give your comments from there. Thank you. Minister Roland.

Thank you, Madam Chair and colleagues. I am pleased to introduce Bill 2, Supplementary Appropriation Act, No. 1, 2006-2007. This bill requests authority for additional appropriations of $69.246 million for operations expenditures and $45.411 million for capital investment expenditures in the 2006-2007 fiscal year.

Major items included in this request for operations expenditures are as follows:

$33.4 million for the Department of Municipal and Community Affairs to continue to flow contribution funding to community governments pursuant to the community capacity building initiative. These contributions are funded by the federal government's Northern Strategy trust fund. Funding for these contributions was approved and lapsed in 2005-2006.

$3.5 million for the Department of Education, Culture and Employment for the provision of French and aboriginal languages in the Northwest Territories. The expenditures will be offset by revenues from the federal government.

$3.0 million for the Department of Public Works and Services to undertake pile inspections and repairs on Government of the Northwest Territories buildings.

$2.2 million for increased costs resulting from the rise in fuel prices in the NWT since 2003.

$1.9 million for increases to the northern allowance as provided for in the Collective Agreement between the GNWT and the Union of Northern Workers.

The operational funding request also includes $15.3 million for contribution funding for the continuation of infrastructure projects not completed in the 2005-2006 fiscal period. Funding for these projects was approved and lapsed in 2005-2006.

The major request for capital investments expenditures is $40.3 million in capital carryovers from the 2005-2006 fiscal year.

That concludes my opening remarks. I would be pleased to answer any questions Members may have. Thank you, Madam Chair.

Thank you, Minister Roland. General comments. Mr. Ramsay.

Thank you, Madam Chair. I guess where I’d like to start with this is the fact that the government is lapsing a number of projects from one year to the next and, as the Minister knows, this causes me a great deal of concern. The reason I bring that up -- and the Minister spoke of it in his opening comments -- is the fact that it begs the question of what the various departments out there are doing. Are they doing all the work that they’re supposed to be doing? Are they contracting what should be their responsibilities as employees out to various contractors in the hopes that they can do the work for them? What is the real issue on why, as a government, we’re lapsing so much in capital projects and we’re faced with this supp today? I think the Minister should explain for the record why he believes the government is lapsing so many projects this year. Thank you.

Thank you, Mr. Ramsay. Mr. Roland.

Thank you, Madam Chair. Madam Chair, a number of factors play in the size of this supplementary appropriation document. It is a larger amount than we normally do at this time of year. Every year we have done capital carryovers from projects that were not completed in the previous fiscal year and carried over for the following year. What we see in large increases in this amount are results, as I stated in my opening comments, the funding that’s flowing to communities through the community capacity building initiative and that’s over $30 million there. As well, the large amount that we’ve incorporated in our capital plan for Municipal and Community Affairs that would help out communities, this capital plan that was put out in 2005-06 was the start of a larger than normal. Previous years we normally spend about $50 million in new capital program. We went up to $75 million, recognizing the fact that we had a number of schools and so on that needed significant repair or replacement and those were put into the plan. If you have one school, for example, start in that fiscal year and doesn’t get the majority of funds spent, then that money is then transferred over and we could have large fluctuations from one project numbering into the millions of dollars. So there’s a number of factors. One, the new capacity money from the federal government and the increase in our capital program overall. We are having difficulty, however, getting our work done in a heated environment that we are in when it comes to the economic side of the scale.

The government contracts at one time were seen as the contracts of choice that people wanted to get, but with as much activity that’s happening we’re having difficulty getting bidders on some of our projects. The costs on a number of the projects are coming in higher than anticipated and departments are having to go back to the drawing board or request more money and that then delays issuing contracts as well. Thank you, Madam Chair.

Thank you, Mr. Roland. Mr. Ramsay.

Yes thanks, Madam Chair. Madam Chair, I think the $40.3 million that’s being carried over this year, as I mentioned, causes some concern for me and it perhaps causes some concerns for other Members, but I think that the Minister has to provide some more leadership and some more direction to the departments in order for them to carry out the work that they’re supposed to carry out. As is evidenced by the carryovers this year, that work is not getting done. I’d like the Minister to give us what his plan is to make sure that departments are carrying out this work, otherwise why should we approve another capital plan next spring in our budget session if the work is just not going to get done? Like why even bother? Why don’t we just put the brakes on all of our capital spending, let them finish the projects that they have and then we’ll look at some more? But I think if we keep going down the path that we’re going down, there’s going to be a huge backlog and this work’s not going to get done. Concentrate on the projects that you’ve got, finish them and then come back. I just want some assurances, and I haven’t heard them yet, from the Minister that he’ll direct the departments to carry out the work and get some work done. Thank you.

Thank you, Mr. Ramsay. Mr. Roland.

Thank you, Madam Chair. Madam Chair, a number of factors, as I already laid out, have built to the size of the supplementary appropriation. For example, I’ll just run down and give it a department-by-department breakdown of the capital portion of this supplementary appropriation. Municipal and Community Affairs is just over $3.7 million; Public Works, $7.8 million; Health and Social Services just over $7 million; Justice, $1.7 million; Education, Culture and Employment, over $13 million; Transportation, $5 million; Industry, Tourism and Investment, $600,000; and Environment and Natural Resources just under $400,000. So that’s a substantial amount of carryover. But when you look at what’s happening in our communities and the increase in the capital amount that we’ve, as a government, approved, has had an impact with what can get done in some of our communities. A number of factors that we have to look at government-wide is how do we get more involvement from our business sector in bidding on our capital projects, how do we have competition that would result in more favourable prices? If we can’t get more favourable prices, then, yes, we’re going to have to review the capital program as to the dollars that are there because our dollars are capped. The capital program cannot keep growing. We’ve highlighted approximately $75 million in projects. If those projects don’t get off and are delayed and we continue to carry over projects, the more projects we carry over, the less money is going to be allocated for future capital programming and that’s something we’re going to have to deal with for sure in trying to get, as I stated earlier, some involvement from our business community as to taking up this work.

As well, further to that, as a government, we’ve had a number of departments who were downsized in the mid-'90s because of the government’s fiscal situation at the time and reduced the capital program significantly so staff that are within departments that would normally be able to do some of the plans are not there any longer, and that’s why you would see the increased use of outside sources of help being consultants in a number of areas to help departments get on with the work. Thank you, Madam Chair.

Thank you, Mr. Roland. Mr. Ramsay.

Thanks, Madam Chair. According to some of the, I guess, excuses for the work not getting done, it was the consultants that were also not completing work on time or getting things done and I think the message that I do want to send, Madam Chair, to the Minister, is the work isn’t getting done and I think I just want to send that loud and clear to the Minister. I don’t believe we’re doing enough to make sure the work does get done and I’ll leave it at that, Madam Chair. Thank you.

Thank you, Mr. Ramsay. Mr. Roland.

Thank you, Madam Chair. Madam Chair, I already know that the work is not getting done. I’m having to carry this forward to the Assembly with a larger than normal amount in capital carryovers and we’re going to have to deal with that one more in a sense that we have a capital program that has a limit to it and we are now at that limit as we move forward and if projects don’t get done and we can’t find new funds for newer projects, we’re going to have to move forward on that and look at some initiatives of how we exactly do that. Further to that, and that’s something we have to finish here, if we’re going to put more forces to work here, departments are going to be requesting more funding on ongoing O and M. So that’s another hurdle we would face in trying to move some of these initiatives forward. Thank you.

Thank you, Mr. Roland. Next I have general comments, Mr. Braden.

Thank you, Madam Chair. Similar to Mr. Ramsay’s concerns, I was looking at the quantity both in terms of the number of projects and the dollar value that seems to be kind of accumulating from one year to the next and there is a trend, Madam Chair, based on a kind of a preliminary analysis that proves to me that we are, if you will, losing ground in this area and at least for the last three years the trend is that most projects are lapsing and more money is accumulating on the carryovers. While on one hand certainly there’s a number of circumstances that we need to look at and accept, and I’m prepared to deal with as to why this is occurring. But I’m wondering at what stage, Madam Chair, are we going to encounter some kind of a gridlock here where we are backed up with so many projects and so much money moving from one year to the next that we’re going to lose sight of what needs to be done and how we are doing it? Sort of the old adage, if you will, should we really take on new projects and new initiatives when we are falling, as I say, the trend seems to be, Madam Chair, we are falling behind on looking after the ones we’ve already committed to.

I guess just to give you a bit of this analysis, Madam Chair, if we look at some of the departments that have the larger capital budgets, Health and Social Services three years ago lapsed 44 percent of its capital dollars. Two years ago 16 percent lapsed. So in the current fiscal years here, 65 percent lapsed. These are not small amounts of the budgets. We’re not just dealing with single digits or maybe in the teens, but over half of the money that the department asked for and we approved is lapsing. So this just gives me pause, and I think my colleague Mr. Ramsay too, to say just how are we going to be able to cope with the quantity of projects and approvals and things that we’d like to do that we need to do, given our track record in completion? So if I’m going over some old ground here that Mr. Ramsay has already talked about, Madam Chair, whether there’s any new aspect to my comments that the Minister would like to look at and this is in the general comment area, Madam Chair.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Madam Chair. Madam Chair, the issue of gridlock, when we hit gridlock, if you talk to a number of departments they would say that we are already at that stage. The capital program we approve on an annual basis does not permit us to deal with all the requests departments put in. The process would work as we do our business planning and look at our capital program. The projects that would be approved by this Assembly, we would go back to the drawing board in the sense of a capital program that may have been approved. If there isn’t an actual contract tie to that project, it would go back into the mix as we review the capital projects on an annual basis as we prepare our business plans. On that basis, departments would have to then justify if that project can stay in. That goes through a number of working groups in departments, then a deputy minister review, and then it would come to the FMB table for final review before me preparing and coming into this House for final approval.

The situation we would have, and have now, is when departments feel that they have a high enough priority project that does not get the funding, it would get what we call red flagged and would be addressed to the next level. We would review that to see if we should try to find the money to improve or increase our capital program, or if we would bump another project off that program to fit something that is now more critical. That’s the situation we’ve been in for awhile. Yes, the amount of carryover that we do ties up the dollars available. If we don’t proceed with those, there is less and less wiggle room or room for new projects to be put on the books and that is a growing problem that we are going to have to deal with. We are going to have to find a way of either moving along with some of these projects or deferring them because, for one reason or another, they are not at the stage that was anticipated.

For example, if a department had requested funds for a specific project and that project then gets a change from the department aspect, they want to change some of the work that’s happening in a renovation or adding to a new facility, that would go back to the drawing board, or if this Assembly directs a Minister to review the plan or take a look at for Health how to deal with the master plan, that would affect the capital plan.

That’s the situation we find ourselves in. Yes, it’s a growing problem we are going to have to deal with. The more we continue to carry things forward, the less that gets done in the sense of projects being completed. We must also realize many of our projects are into the multimillion dollars and would require a multi-year commitment as we move forward, whether it's health facilities, education facilities or some of our larger municipal infrastructure. Thank you.

Thank you, Mr. Roland. Mr. Braden.

Thank you, Madam Chair. I appreciate the discussion here and the acknowledgement or confirmation that this is not something that seems to be happening; it is something quite tangible. The Minister has told committee that it’s a growing problem and one we are going to have to deal with. Would the Minister advise or commit to coming back to perhaps standing committees with some outline of what the status of this growing problem is, and perhaps come back to committees with some options on how we can help address it, Madam Chair? Thank you, Madam Chair.

Thank you, Mr. Braden. Mr. Roland.

Thank you, Madam Chair. I have already had a number of discussions with my colleagues. More importantly, I have had a discussion within one of the departments that deals with client departments, that being the Department of Public Works, and reviewing why we’ve had such poor responses from some of our projects that we put out there for tender or RFP and having to look at how we can try to increase the competition level or deal with our capital program. One of the issues we have to look at is how our capital program is put together. For example, when a department comes forward for an estimate on a school, that initial estimate is done three to four years prior to actually being established in the capital plan and approved by this Assembly. When that number is first estimated, that is quite a time shift to look at. When it finally gets approved here and the department goes out for a tender or RFP and it comes back quite off the mark, that’s one of the reasons, especially since the last few years we’ve had quite an impact on labour forces and also materials available to us. That’s something we are going to have to look at, is how we do some of these cost estimates as they come forward to this Assembly for approval in giving more accurate figures, so we don’t have projects that go out and the bids come in high and the departments have to go back to the drawing board and either drop some of what their requirement is or request more funding. Thank you, Madam Speaker.

Thank you, Mr. Roland. Next on the list for general comments is Mr. McLeod.

Thank you, Madam Chair. I am concerned, too, with the amount of projects that have lapsed and having to come back in an appropriation. I want to ask the Minister if one of the reasons a lot of these projects are lapsing is because I see the word consultant a lot and I have seen that delay a few projects. I am also wondering if the fact that the government enters into negotiations for contracts with some groups, if that has bearing on the amount of programs that have lapsed because they couldn’t come to agreement. Thank you.

Thank you, Mr. McLeod. Mr. Roland.

Thank you, Madam Chair. Madam Chair, there are quite a number of reasons why there is a large carryover. As I stated earlier, we’ve increased the amount of dollars available to communities for Municipal and Community Affairs, as well as the funding through the northern trust that was established. That is a lot of money now available to communities that some communities were not prepared for. If you look at a lot of this, whether it’s a pool remediation or a community office upgrade, water treatment plant upgrade, there are a lot of projects that aren’t high in value but they still require some planning as we proceed. It’s equipment, as well. Communities have had to have some discussions in that area or could not procure the equipment in time. One of the other areas is when we enter into discussions on projects with organizations or a bidder even, for example, if it’s a public tender and we get three tenders and they are all over the price we have established, we would have to request more funding or change the scope of their program. If they think they can come up with the money, then they can enter into discussions with the potentially lowest bidder. Sometimes those discussions are not fruitful at the end of the day and they end up going back to the drawing board.

Is there an increase, for example, in negotiated contracts? That’s another avenue. Whenever you enter into the negotiated contract process, you still have a dollar value attached that the department cannot go over on a specific project. That can have an impact, because usually that discussion can go back and forth for a way to come up with agreement on that.

As well, if a community is not satisfied with what is being proposed, the community itself, in trying to work with a community on a location for a facility, for example, a tank farm or another community facility, that can have an impact on moving forward. Thank you.

Thank you, Mr. Roland. Mr. McLeod.

Thank you, Madam Chair. Thanks to the Minister for that. Again, I am not a big fan of negotiated contracts. I think that does delay a lot of projects, but I can understand the government making a commitment and trying to accommodate organizations and aboriginal groups and negotiate contracts and, to me, not being able to agree on a price will delay projects. Has this always been a problem historically and was there this much of a problem when most contracts were publicly tendered? Thank you.

Thank you, Mr. McLeod. Mr. Roland.

Thank you, Madam Chair. We haven’t done a review specifically if it’s negotiated contract process or a public tender. As I stated, one of the reasons this is larger than normal is because of the amount of money that was put into the capital plan increased significantly in prior years. Previously our capital plan was targeted at $50 million. We are now targeted at $75 million. So just the volume of capital projects approved has increased significantly as well as the dollars that came through the Northern Strategy trust fund. That is added to that, as well as the federal gas tax contributions. That has increased the amount of money that’s available and a lot of communities were not prepared to deal with that type of a volume initially. As we go through this process in future years, that will start to take care of itself.

One of the other concerns, a bigger one we will have to deal with, is how do we ensure there is competition amongst some of the contracts. A lot of our larger construction companies that dealt with the multi-million dollar contracts we have in place are no longer in the North, or are not dealing with the North, or think, for one reason or another, that there is less risk in other jurisdictions rather than the Northwest Territories and have moved out of the Northwest Territories to focus on their work. So that is one of the areas we are having to have a look at.

Thank you, Mr. Roland. General comments. Any further general comments?

Detail.

Could I please then direct Members’ attention to page 5 of Bill 2? Legislative Assembly, operations expenditures, not previously authorized, office of the Clerk, $6,000; total department $6,000.

Agreed.

Thank you. Executive, operations expenditures, executive offices, not previously authorized, executive offices, $19,000; total executive offices, $19,000.

Agreed.

Thank you. Executive, continued, operations expenditures, Financial Management Board, directorate, not previously authorized, $3,000; directorate, $11,000; government accounting, $3,000.

Agreed.

We are on page 7, let’s start this again. Directorate, $3,000; government accounting, $11,000; budgeting and evaluation, $3,000; Audit Bureau, $2,000; total Financial Management Board Secretariat, $19,000.