I’m looking at this supplement here for $5 million, and there only being several weeks left in the fiscal budget of the territorial government, I’m just wondering how the department expects to be able to spend this money on the upgrade to the 177 access road.
There has been much interest expressed by the contractors in the region to get work underway. The leaders in the region have asked us to get work underway as quick as we can. The last missing piece, and part of that was to get the letter from the federal government, and so we are here to seek this $5 million in additional funding for this year. We have been talking with contractors who are ready and willing to get that work underway as soon as the funding is approved.
My next question is concerning we’ve been given some information from the federal government that they’re funding most of this project. I’m just wondering where the federal government sits on any cost overruns. Is that the responsibility of the GNWT?
Thank you, Mr. Bouchard. Mr. Miltenberger.
Yes, Madam Chair, we have a contingency built into the project, but clearly the cost overruns would be the responsibility of the Government of the Northwest Territories. Thank you.
I realize that some of these are specific to the whole project, but my feeling is that the $5 million commitment here is kind of a tipping point if we go forward with this. I think we should be supportive of the whole project.
I guess my question is for the contracting out of this work and more to follow. Does the government expect contractors to carry bonding to complete this project?
Thank you, Mr. Bouchard. Mr. Neudorf.
Thank you, Madam Chair. We have not yet determined the final approach to procuring the construction work, but all government contracting procedures, rules and regulations would be followed as part of that. Thank you, Madam Chair.
The deputy minister kind of led me into my next question. I’m just wondering how the GNWT expect… We talk about the economic development, the opportunity this provides for our members in our communities and our constituents in the Far North. I’m just wondering how the department expects to maximize the northern content for the employment on this project.
Thank you, Mr. Bouchard. Mr. Miltenberger. Oh, you’ll refer to Mr. Ramsay. Mr. Ramsay.
Thank you, Madam Chair. If the Member could repeat the question for me, please.
I was just asking about the procurement of the work and how the government expects to maximize northern content and northern employment. We’re talking about this as an economic development driver. How is the department expecting to maximize the fact that the Northwest Territories is going to see the full impact of this $299 million project?
Madam Chair, that would be in how we procure the services to build the highway. There are companies located in the Beaufort-Delta that could carry out the work. Our government’s perspective on this has and will continue to be that opportunities have to be maximized, not only in the territory but in the region itself. In procuring the project, we will make every effort to ensure that as much of that $299 million stays here in the Northwest Territories, and specifically in the Beaufort-Delta. Thank you.
As I indicated earlier, I think the $5 million we’re approving here is one piece of the large puzzle, and I think we’ll be seeing further supplements here quickly. Basically to the point of committing to the project, I think this is a tough decision for a lot of the Members here to decide what we want to do with this money and whether we support this project. For me personally, it’s been a challenge back and forth. I know it’s large infrastructure money, and it’s hard not to look at last projects such as the Deh Cho Bridge and the overruns there. The Deh Cho Bridge had a revenue stream to it, but this one has a revenue stream and the federal government sponsoring basically two-thirds of it, from what the numbers are indicating.
I see the benefit to the area, the economic development driver, and I’m supportive of that. I guess from my community, we’re interested. We were always interested in seeing expansion of the Mackenzie Valley Highway basically from the south, maybe Norman Wells where there’s a lot of activity where we’re seeing the benefits. But I understand the federal government’s committed right now to the north end and their nation building and us building a territory that’s going to have a road all the way to Tuktoyaktuk, to the other ocean.
So I’m supportive of this $5 million, and I’m supportive of the entire project. It’s been an ongoing debate and discussion in our community. We’ve had discussions whether we support the project or not, and I think we need to look at all the options. The federal government increased their borrowing limit; they made it accessible for us to do this. So I am giving my support to this project, I guess.
I know there are lots of questions and lots of concerns from different Members, and I think we need to challenge the Cabinet and the Premier to make sure certain things are being done, that this is not just being an open chequebook to build the road and do a whole bunch of cost overruns. I think we need to make sure that we stay on budget and we make sure the road is built to a good standard.
I know there are all kinds of questions out there, and there are questions and concerns whether we have a complete design or not. But some of these projects are hard to do unless you start going into them. I’m hoping that things will get done more efficiently, and I hope the number for one rare reason would be under budget, which I know the government definitely doesn’t have a good track record of keeping projects under budget.
That being said, I think the area needs our support, and I think it is building a nation, building a territory, and I think it’s the first leg in building the Mackenzie Valley Highway. We look forward to probably the south end. My colleague to my right here from the Sahtu and I would like to see that come to fruition in our terms of offices here, at least to have something to move the project forward.
That being said, I just wanted to lend my support to the project at this time. I know there are lots of questions out there, and we’ll have to deal with those questions and those concerns as we move forward. Thank you, Mr. Chair.
Thank you, Mr. Bouchard. Anything in response? Okay, nothing. That was a comment more than anything else. Thank you, Mr. Bouchard. We are still on page 5 of the 2012-2013 Supplementary Appropriation (Infrastructure Expenditures) No. 3. Next I have Ms. Bisaro.
Thanks, Madam Chair. I have specific concerns about the only one project on this page, and that’s the Tuk-Inuvik highway. I think certainly Members and the Regular Members, through our discussions, know that I have a lot of concerns with this project. But I’ll ask a couple of questions here and perhaps give my editorial later on.
I heard the Minister say a little bit earlier in response to another Member that, I think the question was, when is enough enough? The Minister said enough is enough when we’re opening the road. I thought to myself, that’s all well and good, but at what price? Where is the Minister and this government willing to sign off on this project? We’re, at the moment, hoping it’s going to be $299 million plus what we’ve spent already. So that puts us up around $312 million or so, plus maybe $30 million in unknown risks. So we’re up around $350 million, give or take. So should we encounter other difficulties along the way, at what point does this government think enough is enough? Thank you.
Thank you. It’s a hypothetical question, but I’m going to ask Mr. Miltenberger to respond.
Thank you, Madam Chair. It is truly a hypothetical question. The fact of what we know is we have $299 million: $200 million just confirmed from the federal government and $99 million out of our own pockets. We have some costs already of $12 million.
We’ve given every commitment we can possibly give at this juncture about managing the project. We have a contingency fund. We’re going to do all the work up front to be ready for construction this coming fall. So it’s on that basis that we’re proceeding. Otherwise, if we took the approach suggested by the Member, we could potentially paralyze ourselves as a government on just about everything, all the potential what-ifs if everything goes bad and nothing works.
Does the Minister want to guarantee that, on budget? Rhetorical question. Thanks.
So one of the other statements that was made, by either the Minister or the deputy minister, was that geotechnicals will be finalized in the coming months and that’s one of the unknowns for me, and I think it’s one of the unknowns at the moment for the department and for the project. So I haven’t heard it said, in terms of geotechnical, there are concerns from certain Members that the terrain that we’re working in can be very difficult, we’re dealing with permafrost and I’ve heard it said that we are dealing with a certain section of the road we’re dealing with a glacier. So if we don’t yet know, we haven’t finished the geotechnical, how can we be as certain as we are about the cost of the project? Thank you.
Thank you. There are no glaciers up there that I’m aware of. The reason we know what we do is because we’ve taken the time and we’ve spent some good, wisely invested money up front to do the estimating. We’ve started way back, many years ago, with a very rough estimate, and we’ve finalized it and fine-tuned it to the point where we came forward with confidence that we could do it for $299 million. So we spent $12 million getting ready to make that determination.
Thanks to the Minister. So, I mean, we’re working on a best guess, and I guess that with any project we’re working on a best guess, but it doesn’t give me much comfort at this point, unfortunately. It’s been mentioned several times already that we have been given, so to speak, $200 million from the federal government, and that’s a huge amount of money. I certainly appreciate the commitment of the federal government to the project. However, it’s my belief, and I believe it’s practiced elsewhere, that new roads are 100 percent paid for by the federal government and we are now getting 67 percent, approximately, of our project covered by the federal government. I’m having a very difficult time with the reduction. We were talking about a 75/25 split. I was relatively okay with a 75/25 split, but now we’re down to 67 percent and that just means that’s a greater burden on us, as a government, and it concerns me a great deal. It concerns me on two fronts, one, that we have to put more money in of our own and secondly, that the federal government, in my mind, is backing away even further from their responsibility to pay for new roads across our land.
So I’d like to know, several Members have been talking about investment and that it’s economic development and so on, and it’s been referred to by a couple of people as a long-term investment. I’m having great difficulty understanding and believing, in my heart, that this is a long-term investment. I see the Mackenzie Valley fibre optic link as a long-term investment because it will grow businesses in the Beau-Del, and it will grow businesses and it will grow employment for people up there for a very long time. I see this project as not necessarily growing businesses, but it certainly will employ people, but only for a five-year period. So I don’t see this as a long-term investment. Could the Minister explain to me how this could be characterized as a long-term investment project? Thank you.
Thank you. We make long-term investments in the territory, that’s what we do as a government. Seventeen Assemblies have been working, Assembly after Assembly, to put infrastructure in the ground, on the ground that improves the quality of life that helps build the territory that we all agreed is part of our vision. Part of that critical infrastructure is roads. A road, the northernmost section of the Mackenzie Highway has been a critical part of the northern dream for longer than I can remember. So if the Member is asking if we look around the North for every dollar we spend, where do we get our money back, where is the economic return on our investment, then we would have a very interesting, challenging discussion, because we make political decisions in our political self-interests that may not have that immediate return on the dollar. But if you look, over time, the value of a road that opens up the northernmost part of the territory, I believe the Member’s comments are prefaced on the assumption that somehow there will never be any further activity up in the Mackenzie Delta, the Beaufort-Delta, when we know it’s sitting on a storehouse of resources. What we invest today, I believe, over time, will prove its value the same as the bridge will. There’s no longer people complaining about the bridge, except maybe politically about the process, but nobody talks about gosh, I really miss the days of the ferry and the winter road and all the uncertainty and not being able to travel 24/7 and, man, those were the good old days that I really long for.
So this is, I think, a territory-building, nation-building investment. It is going to have economic impact far beyond the term of this Assembly. Thank you.
Thanks. Just one last question. How many people are required to construct this road? How many PYs are going to employed over this five-year project? Thank you.
Thank you, Ms. Bisaro. Mr. Neudorf.
Thank you, Madam Chair. The exact approach to construction is still not yet determined, but our initial estimates show that it could be up to 400 workers during each of the five construction seasons. Thank you.
Thank you. I just want to say that next on my list I have Mr. Blake and Mr. Moses, and then I’m going to return to Mr. Bromley. I’m just giving everybody a chance to make their comments and I’ll return to Mr. Bromley. So, next I have Mr. Blake.
Thank you, Madam Chair. As to the $5 million, I am in support of that. It seems that we’ve actually gone beyond the $5 million and started talking about the total project, so I guess I’ll follow the same lines. I’d like to ask the Minister how many projects similar to the Inuvik-Tuk highway – people are referencing the Deh Cho Bridge, whether it’s realignment of Highway No. 3, the Ingraham Trail – has the federal government committed to an investment as a percentage as we did on the Inuvik-Tuk highway? Thank you.
Thank you, Mr. Blake. Minister Miltenberger.
Thank you. Madam Chair. We’ve had, over the years, federal investments through the Build Canada funding, if that’s what the Member is referring to, where we’ve taken full advantage of the cost-shared dollars. As a very specific example, there are no really large projects that come to mind, but with all the projects, we literally put… No, actually, over three years we’ve put a billion dollars of infrastructure in the last government on the ground, combined with our dollars and the federal dollars taking full advantage of all those dollars as we were fighting off the impacts of the huge economic downturn in 2008. Thank you.
Thank you. My next question is, as everyone is well aware, we have an employment rate of 35 percent. So we have 65 percent of unemployment in our communities. How will this project impact the unemployment rate in our small communities? Thank you.
Thank you, Mr. Blake. Mr. Ramsay.
Thank you, Madam Chair. It will have an immediate impact on the unemployment levels in the whole region, not just in Tuktoyaktuk and Inuvik, but the surrounding communities. I imagine there will be a workforce drawn from those communities as well. I imagine we’ll have an immediate impact on the unemployment levels in the communities in the Beaufort-Delta.
My final question is coming to training. How soon can we see the training begin in the communities of the Beaufort-Delta? Also, a few years back when industry was in Inuvik, they did a lot of training over the summer. They actual speeded things up in instances where we had young people there without a licence. Within two to three weeks, they had their actual Class 1 licence, and I’ve seen them move on to become a lot of good equipment operators. Whether it’s the Minister of Transportation or the Minister of Education, Culture and Employment, will he commit to offering those same types of training immediately?
Thank you, Mr. Blake, for that question. I just want to get the committee’s concurrence here because I know what Mr. Blake said, that we’ve gone from the $5 million on this page to really debating the whole Inuvik-Tuk highway. Mr. Blake has indicated he’s just following suit because other people have decided that this is the go/no-go, this is the lynch pin on this project, so this is the appropriate place to have this discussion. I just want to get committee’s concurrence that everybody is still cool with this. It’s not specifically related to the $5 million, the questions. Mr. Miltenberger.
Am I cool with it?
---Laughter
I had an intense flashback when you said that. When this supplementary appropriation gets, hopefully, the approval of this Assembly, then it will trigger a whole host of processes that will address the issues by the Member to make sure that we start tooling up, that this project brings good fortune to all parts of the Beaufort-Delta. It raises everybody’s boats. We want to make sure we have maximum employment. We want to make sure we use all the local businesses that we can locally, and that commitment is given. Once we get the thumbs up and we know we’re in business, that process will be triggered.
Thank you, Mr. Miltenberger. Mr. Blake.
No further questions.
I’m sorry. I hope my comments didn’t discourage you from continuing. I have Mr. Moses next.
Thank you, Madam Chair. I just wanted to clarify on a couple of things with the $5 million here because there have been some discussions, and you mentioned it quite well there, in terms of this having become more of a discussion of more than the $5 million and the project itself. I have heard some comments as we’re trying to move forward on a best guess as well as some assumptions on the project and cost overruns. I just wanted to confirm with the Minister today, I know that we did go out for some other cost estimates.
Can the Minister maybe just elaborate on how many cost estimates did we go out for and the expertise of advice that we did get from these contractors doing the cost estimates, to bring the number before committee and before the House today to make the decision on and that it’s more than just the best guess or assumption in terms of the cost of this project? Can he just elaborate and confirm for Members here today that it’s a sound number, that they in fact went to the Prime Minister with today, just so that Members know that it was expertise that went and got these cost estimates?
Thank you, Mr. Moses. Mr. Miltenberger.
Thank you, Madam Chair. This project has a long history and some of the initial numbers were very basic estimates. Over time we’ve used two separate consultants as well as the expertise within the Department of Transportation to refine the estimate to the point where it is today. Part of the upfront sunk costs that we talked about, the millions that we put into it, was to do that so that we could make the most informed decision possible. So we’ve had two consulting firms and the Department of Transportation separately looking at this to help us refine the numbers.
Thanks for the clarification, confirmation. I think that maybe some Members were taken aback and thinking that was possibly a best guess in terms of the cost of the project here.
Moving forward with the $5 million, can the Minister confirm whether that $5 million is on top of the $299 million or is it part of the $299 million and that’s where he’s coming from, so that when Members are speaking of cost overruns they have a clear understanding that this $5 million is either part of the $299 million or not part of the $299 million.
It is part of the $299 million.
More just clarification of a couple of items here in terms of moving forward specifically on this one page for the $5 million, and moving forward with the geotechnical work and some of the other preparatory work to start moving on this project here. I just want to get a little bit of clarification and let all Members kind of understand what this $5 million was for and where it’s coming from. Just more of a comment there and just for clarity and for the confirmation.
The two basic areas are going to be to prove up the gravel sources from probable to proven, and the other big piece is to conclude the geotechnical work that needs to be done so that we can move the design from the 85 percent complete to the 100 percent complete in time for construction this coming fall.
No further questions.
Thank you, Mr. Moses. Just before I go back to Mr. Blake, speaking of who is cool and who isn’t cool, I will recognize my husband in the gallery here today.
---Applause
He’s cool. Next I’ll have Mr. Bromley.
Thank you, Madam Chair. I want to follow up on a few of the comments and questions we’ve heard here. The first is the assumption that had been made. I don’t think many assumptions are being made, but we do have a number of risks out there, and the assumption is that some of them will prove to be real.
I’d just like to know, in the number of projects that the Minister is familiar with of this nature – and I know, as the Minister said, we’ve never done a project of this magnitude – but where we have an 85 percent design going into it, how many of them has he known the cost to go down on?
Thank you, Mr. Bromley. Mr. Miltenberger.
Thank you, Madam Chair. What I have learned is, when I’m given two figures, a high one and a low one, especially as Finance Minister, I tend to immediately focus on the high number, knowing that in my experience the low number never tends to be the one where the project ends up.
