Debates of March 1, 2006 (day 39)

Yes, Mr. Chairman.

Does committee agree? Sergeant-at-Arms, please escort the witnesses in. Thank you.

Thank you, Mr. Minister. Can you introduce your witnesses, please?

Thank you, Mr. Chairman. Joining me today is the secretary to the Financial Management Board, Mr. Lew Voytilla.

Thank you. We are dealing with Bill 19 at the present time. We will stand down consideration of the preamble, clauses and schedule, and deal with the detail on a page-by-page basis. Can we turn to page 5? Page 5, Legislative Assembly, operations expenditures, office of the Clerk, not previously authorized, $95,000.

Agreed.

Total department, $95,000.

Agreed.

Page 6, Executive, operations expenditures, Executive offices, not previously authorized, $1.210 million.

Agreed.

Total Executive offices, $1.210 million. Mr. Braden.

Mr. Chairman, thank you. One of the details on this page is listed as a $14,000 contribution providing increased funding to the Status of Women Council of the Northwest Territories for additional costs associated with the implementation of salary increases.

Mr. Chairman, at various times in this session, we have talked about our government’s responsibilities to various boards and agencies and organizations that deliver services to us and this detail very specifically identifies one of these organizations, or, sorry, two of the organizations, the Status of Women Council and the Native Women’s Association, as being eligible for increased contributions for salary increases comparable to the GNWT public service.

Mr. Chairman, as these types of organizations, I certainly am in support of this allocation, but what I’m wondering about is how do we differentiate between these two organizations, the Status of Women Council and the Native Women’s Association, as opposed to other organizations such as the YWCA, the NWT Literacy Council, the NWT Association of Families? Why are they not included in this supp for similar allocations for salary increases, again pegged to what we have agreed to for our own civil service? So can the Minister give me some explanation as to why these two organizations are identified and not others, Mr. Chairman?

Thank you, Mr. Braden. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, the area that was raised earlier about the third-party accountability framework, what we’ve done in the Financial Management Board, trying to deal with the concerns about forced growth in some of these areas, as we established third-party funding criteria and established the three categories. The first category involves those agencies or boards that are legislatively mandated for the provision of core public programs and services. So that would be the first area that we would look at. As well in that area we look at cost elements that are highly defined and maintain the competitiveness and capacity, and operations are critical to the stability and continuity of programs delivered. So there are a number of areas that we look at and that would be the…Category one is the one where we would look at applying forced growth.

The other two, category two and category three, is something we would look at, and then there’s some judgement in what a category two might be versus going into category one level programs. But we established this criteria and looked at the roles that are out there and came up with this level of area where we feel we could support the forced growth portion. Thank you.

Thank you, Mr. Minister. Mr. Braden.

Okay. So what other agencies, Mr. Chairman, would be included in this category one, which I understand these are organizations which would automatically get a comparable increment to our public service. Are there any other agencies or organizations of this nature, Mr. Chairman?

Thank you, Mr. Braden. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, as our process works, under forced growth those that do end up into category one would have the ability through their processes and negotiations and substantiation put in through their appropriate department's requests for forced growth and that would be considered through the normal budgetary process. One of the other organizations, for example, is the housing authorities. Those have been put into the category one area. We do have some information here, and it would take a bit of work to go through it to pull out all the specific ones, but it would be areas like that where they’re delivering a direct service in the sense that we would be doing as a government. So housing authority and public housing areas, those are areas delivering on behalf of the Housing Corporation. Thank you.

Thank you, Mr. Minister. Mr. Braden.

Well, okay, this is, I guess we’re straying more into an area here of policy, Mr. Chairman, rather than direct consideration of the budget here. I guess, you know, the Minister said there is some discretion connected with what then is a category two or category three organization and where I’d like to see our government being more proactive is to direct each department to really proactively look at all of the boards or agencies or NGOs that we contract with to deliver programs on our behalf and strive to bring forward new allocations or new requests for funding, as the Minister just explained happened with these two organizations, these two women’s organizations. Can each department be directed to look at the contracts we have and consider whether or not new funding allocations could be brought forward as soon as possible so that we can try on an urgent basis, I would say, Mr. Chairman, on an urgent basis, to begin bringing those contract organizations up to some kind of parity with our own wage increases? Would the Minister be able to consider that? Thank you.

Thank you, Mr. Braden. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, I guess just before I get into it, a word of caution about wage parity with our unions. One of the things we look at with forced growth, wages are a part of it, but there’s a whole number of factors that come into this area and as we have setting up this criteria, we’ve just done this for this 2006 business plan process and we can look at going into the next business plan cycle to look at this criteria and seeing how other organizations may fit into this as well. Thank you.

Thank you, Mr. Roland. Page 6, Executive, operations expenditures, executive offices, $1. 21 million.

Agreed.

Total executive offices, $1.21 million.

Agreed.

Page 7, Financial Management Board Secretariat, client services, not previously authorized, $1.239 million. Ms. Lee.

Thank you, Mr. Chairman. On that, I understand these expenditures are for the increasing dental premiums and medical travel assistance. Is that right? I’d like to get some information on what the explanation is for these increases. Thank you, Mr. Chairman.

Thank you, Ms. Lee. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, what we’ve done in this area under client services now, we’ve pulled all the resources or people, as well as the program, into one area. We’ve come up with a shortfall in the area of medical travel assistance of just over a million dollars, $1.096 million, as well as dental premiums of $143,000. Other departments had within their ability to fund some of the over-expenditures. If you broke this out between all departments, they had some flexibility there, but within Financial Management Board, after pulling these in we have little room for this type of flexibility. That’s why we’ve come forward with a request for this funding. Thank you.

Thank you, Mr. Roland. Ms. Lee.

Thank you. So I’m understanding that this is the government spending on government employees as a government employer, not as the government as the health service provider under the Department of Health budget. Is that right?

Thank you, Ms. Lee. Mr. Roland.

Thank you, Mr. Chairman. Yes, Ms. Lee is correct. It is for our employees. Thank you.

Thank you, Mr. Roland. Ms. Lee.

Thank you. There are two issues with that. I guess one larger issue of health care delivery in general in that I know that the Minister of Health and Social Services had introduced aspects to the policy that was to work to reduce costs or at least better coordinate medical travel. I think he implemented a plan that sort of streamlined at least the authorizing process for medical travel, I think in the hopes of having better control over the medical travel in general. I understand that this is the employer’s portion of it. So I’d like to know if the Minister of Finance or Minister of Health could indicate whether that system, in general, is working and that that is not contributing to the increase we are seeing here.

The second issue, the Minister of Finance indicated that this is the kind of cost that used to be absorbed by each human resource section of each department and now that all the human resources sections have been amalgamated that it’s been all added up into a bigger pot and making it impossible or not able anymore for the departments to find from within. But accepting that as the case, it still raises the question about the fact that in the past years, there was that sort of money floating around where the government could absorb these costs on their own budget. That raises questions about how much control we really have over this budget if different departments can come up with pockets of money that could add up to this amount of money, given that we’re to understand that all these used to be absorbed from within.

Let me just restate those two questions. One is, whether anything that the Minister of Health has implemented has helped in any way to reduce medical travel costs or dental, or what portion of this is due to rising costs of the travel itself. The second thing is about what does he have to say about the capacity within the government to observe this amount of money in previous years? Thank you.

Thank you, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. Our employees fall under the same work that’s happening with medical travel and the work that’s being done by the Department of Health and Social Services. So employees that have to go through and receive or, I guess…What would be the term? Referral. Yes. Referral from a doctor down to Stanton or a specialist, that would still follow through the process of Health and Social Services that’s applied. I guess we can say that although it’s underway, we think that is helping the situation a bit. What we find the costs are increasing around is areas of the airline service itself, the fees there; accommodation costs; as well as more referrals as we have more employees that need assistance through the medical system. That is the reason for the higher cost in this area. It will fluctuate depending on the health of our employees. That is something more difficult to predict. We can lay out the trends and use an estimate, as has been in the past, and come fairly close. But there are, from time-to-time, years where we will encounter a larger surge of employees requiring the needs of the medical profession. Thank you.

Thank you, Mr. Minister. Ms. Lee.

Thank you. I wonder if the Minister could tell us how much of this increase…We’re looking at $1.2 million more than what was budgeted in 2005-2006 budget. The Minister is indicating that some of that has to do with more than expected use. I guess those things could happen, but I’d like to know, I think the million shortfall is quite large and if he could say anything about why the budget was so underestimated. Does the new budget reflect that increase?

Thank you, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, I did give out some of the reasons for why we feel there’s an increased cost. One, departments were able to cover some of the shortfall from their own budgets. But for more of the detail, I’ll have Mr. Voytilla provide that level of information.

Thank you, Mr. Minister. Mr. Voytilla.

Thank you, Mr. Chairman. The Minister has already pointed out that this budget used to be split up among departments and they all funded this themselves. We had a significant increase, though, in medical travel costs in 2004-2005. It went from about $2.8 million the year before to about $3.9 million in one year. That was about a 30 percent increase, which was a fairly dramatic increase over one year. Departments were never, because that only happened in 2004-2005, we never adjusted their budget for that change before we did the HR amalgamation. So they only had funding to transfer into the FMBS in the amount of about $2.8 million, which is the budget that we set up for this year. But in fact, the peak, if you will, in medical travel, or the large increase in medical travel occurred in 2004-2005 and we’re, at this point in time, researching the records for 2004-2005 and 2005-2006 to determine exactly what was the cause of that increase. We can attribute it, as the Minister has pointed out, to airfare increases and accommodation increases and just the number of referrals. But we want to have a more in depth understanding of what drove that significant budget increase in 2004-2005 so that for future forecasting, we can assess that and be not only more accurate in our forecasting, but allow us to assess whether or not there’s some changes or some things we should be looking at with respect to the program that would mitigate costs. So that work is going on at this point in time; however, I expect it will be a few months yet before we’re able to conclude anything and report it to the House.

Thank you, Mr. Voytilla. Ms. Lee.

Thank you on that. That’s fair enough. I’d be interested in looking at what the department finds out in that regard and see what happened there and what we find out. I guess this is an FMBS issue and not a Health and Social Services issue and I would like to ask the Minister to report to us through AOC or something. It would be interesting to know what happened there. Thank you.

Thank you, Ms. Lee. Mr. Roland.

Thank you, Mr. Chairman. We will do that. Once we have this work done, we will be glad to meet with Members and provide the information and some plans of how we might be able to deal with some of these costs. Thank you.

Thank you, Mr. Roland. Next I have Mr. Hawkins.

Thank you, Mr. Chairman. I think Mr. Voytilla started to answer the questions that I had on his last answer. He pointed out the $2.8 million where the rising costs went to $3.9 million. I’m just trying to get a sense of…Well, it’s a significant increase and I guess I wonder, does our 2006-2007 budget address some of these shortfalls? I mean, in essence are we under funding this sort of policy and premium at this time and will we be challenged with a new supp before us sometime in the new budget year? Thank you, Mr. Chairman.

Thank you, Mr. Hawkins. Mr. Roland.