Debates of March 17, 2004 (day 2)

Thank you, Mr. Speaker. I would like to recognize Debbie Raddi, SAO for Tuktoyaktuk. Also, Jackie, self-government from Sachs Harbour. Eddie Dillon was here earlier. He is the Chair of the Tuktoyaktuk Community Corporation. He is gone I think, but he was up there earlier. Also, my CA, Marilyn Cockney. Thanks.

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Welcome. Item 6, recognition of visitors in the gallery. Mr. Handley.

Thank you, Mr. Speaker. I would like to recognize visitors from Weledeh and particularly Chief Darrell Beaulieu with the Yellowknives First Nation. Thank you.

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Item 6, recognition of visitors in the gallery. Mr. Delorey.

Thank you, Mr. Speaker. Mr. Speaker, I would like to clarify, I am glad that my colleague Mrs. Groenewegen is finally recognizing her constituency assistant.

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Sitting next to her is Jennifer Tweedie, a constituent of mine, and her mom. Jennifer is here to go through this unfortunate thing of having to come over here to give birth. So welcome to the Legislature.

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Welcome to the House. Item 6, recognition of visitors in the gallery. Mr. Zoe. At this time I would like to also recognize a constituent of mine in the gallery, Mr. Joe Francis, who is a member of the Fort McPherson Hamlet Council; also Mr. Troy Jenkins. Welcome.

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For all of those who haven’t been recognized…I would like to recognize Mr. Hawkins.

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Thank you for recognizing me, Mr. Speaker. I couldn’t see; my seat stops me from looking into the gallery, but I did try to look quickly and one of my constituents, Mike Adamchick was here earlier for the budget address. The good budget address his comments were on Mr. Roland’s presentation, but if he is still up there, hello, Mr. Adamchick.

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Item 6, recognition of visitors in the gallery. At this time I would like to recognize the people that haven’t been recognized and thank you for coming out today for the budget address. Welcome.

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Thank you, Mr. Speaker. Mr. Speaker, in reference to the budget address today, I have a question for the Minister of Finance. On page 14 it says effective January 1, 2004, we will be increasing the corporate income tax rate from 12 percent to 14 percent. It goes on to say -- and this is something that is complicated I know, but I wanted to make note of it -- as a result of rebasing the tax effort adjustment factor in the new formula financing agreement, the GNWT would actually lose revenues if we attract investments at the current corporate income tax rate. So we have gone from 12 percent to 14 percent and this puts us at a rate one-and-a-half percent higher than Alberta. What kind of an impact is this going to have on the possibility of large companies filing their income tax in other jurisdictions where the corporate rate is lower? Is that something that has been contemplated and considered? Thank you, Mr. Speaker.

Minister of Finance, Mr. Roland.

Return To Question 11-15(3): Corporate Income Tax Rate

Thank you, Mr. Speaker. Mr. Speaker, we have looked at a number of options and potential impacts, and that is one of the areas of potential lost revenue, is that large companies that have the ability to file in another jurisdiction would do so. At the same time, previously we did have a 14 percent corporate tax rate and felt that going back to the amount it was, hopefully wouldn’t drive out people to invest in other jurisdictions. That is one of the areas we did look at but, as the Member stated, we have to address the issue of our rebasing the tax effort. If we don’t do that then we will lose significantly more revenue even though it seems like we do make some, because we’ll have a dollar plus taken off of our transfer payment from Canada if we don’t change it. Thank you.

Supplementary, Mrs. Groenewegen.

Supplementary To Question 11-15(3): Corporate Income Tax Rate

Thank you, Mr. Speaker. Mr. Speaker, I would like to ask the Finance Minister, what was our corporate tax rate at the time that we received those filings, which resulted in what we came to fondly refer to as tax windfalls? Thank you, and what was the rate?

Minister of Finance, Mr. Roland.

Further Return To Question 11-15(3): Corporate Income Tax Rate

Thank you, Mr. Speaker. The initial amount when we had filings, one-time filings in the Northwest Territories, large filings that caused some of our problems, was 14 percent. Following that there was another amount, I believe 12 percent, but as we know now the rebasing effort that is going to be done through the federal formula financing agreement would cause us to go back into what we would call a perversity factor where we would lose more money than we would gain if we did not change our tax effort. Thank you.

Supplementary, Mrs. Groenewegen.

Supplementary To Question 11-15(3): Corporate Income Tax Rate

Thank you, Mr. Speaker. So, Mr. Speaker, I just want to confirm that when some corporations filed their tax returns in the Northwest Territories and paid taxes to our jurisdiction, some of those were received while our corporate tax rate was 14 percent. So what would have been the incentive or motivation for those companies to file with us at 14 percent if Alberta was sitting at 12.5 percent? What would have attracted those and how could we encourage more of that? Thank you.

Minister of Finance, Mr. Roland.

Further Return To Question 11-15(3): Corporate Income Tax Rate

Thank you, Mr. Speaker. Mr. Speaker, we are unaware of what would have caused them to decide to file in the Northwest Territories, besides having a main part of their office and their infrastructure in the Northwest Territories. A company can’t remove all of its earnings and pay it in another jurisdiction. There is still a portion of that they would have to pay here depending on the size of the company, where their other office locations are and the size of their earnings in other jurisdictions as well. Those one-time earnings were good in one sense and bad in another, because that has allowed the situation of overpayment to happen to us on the corporate tax side. As to what caused them to file in the Northwest Territories, we don’t have that information. Thank you.

Final supplementary, Mrs. Groenewegen.

Supplementary To Question 11-15(3): Corporate Income Tax Rate

Thank you, Mr. Speaker. Then to allay peoples’ fears about a mass exodus of corporate taxpayers in the Northwest Territories, then what you are saying is it wouldn’t be realistic to assume that if someone had the lion’s share of their activities taking place in the Northwest Territories and had a corporate office say in Edmonton or Vancouver, that they could legally file their corporate tax return in another jurisdiction to obtain a lower rate. Could the Minister confirm that that is the case? Thank you.

Minister of Finance, Mr. Roland.

Further Return To Question 11-15(3): Corporate Income Tax Rate

Thank you, Mr. Speaker. There is a requirement that they would have to pay some portion of their taxes, depending on the size of their operation and jurisdiction. Now, the other type of income that can be filed or earnings filed would be on investment income, and that doesn’t need a location or an office. They could have a small operation, an employee, a storefront operation that they could file, but that is on investment income. On the actual corporate tax side where the main earnings that we receive would require a certain portion, again, would break out the amount of operation they had in the jurisdiction that they were operating in. There is still some flexibility in there for them to file in a different jurisdiction depending on their location, but the big tax windfalls we had that I am aware of, I believe one of the companies or a number of the companies did not actually have a full operation in the Northwest Territories. That is based on investment income, and we know that as a result of stock markets and that situation. There are not a lot of companies out there that have those types of earnings to want to invest in different jurisdictions, because every company would if they had an opportunity to invest in a jurisdiction with lower corporate tax rates, if they had that flexibility I believe they would. Thank you.

Thank you, Mr. Speaker. Mr. Speaker, as I indicated in my Member’s statement, I am very concerned about the issue of benefits from the Mackenzie Valley pipeline being effectively responded to by our government. A lot of attention has been paid to the aspect of ownership interest in the pipeline by aboriginal community governments. I am certain that in the long run this will prove to be a worthy investment. I think in the short term, we can’t forget the array of other potential benefits to our people. My question is for the Premier. In light of the federal government’s initiative to appoint a special committee, chaired by the Deputy Prime Minister, mandated to guide issues in relation to the pipeline, what has our government done to ensure that this development proceeds in an orderly fashion, addressing all the potential opportunities or concerns that a development of this magnitude involves? Thank you.

Mr. Premier, Mr. Handley.

Return To Question 12-15(3): Preparing For Pipeline Development

Thank you, Mr. Speaker. There has been a lot of concern and a lot of interest by our government on ensuring that this pipeline moves ahead, and moves ahead in a timely fashion. Since we have gotten into the new 15th Assembly, I had a meeting with the Prime Minister in late January, and this issue was raised with him. My suggestion to the Prime Minister at the time was that the Mackenzie Valley pipeline was critical enough to all of Canada that it really needed to be directed from the central agencies of the federal government, particularly PCO and by federal Cabinet. Since that time, he has appointed the Deputy Prime Minister, Anne McLellan, as the Chair of a federal pipeline committee. Deputy Prime Minister McLellan called me last week; I have had a telephone conversation with her. I have identified with her some of the concerns that we have and we have agreed that we would maintain open communications to ensure that we are doing everything within our capability to keep this pipeline moving on schedule. So, Mr. Speaker, that is an overview of the main issues we have been dealing with. We have also worked closely with aboriginal governments on the ownership issue as well as other matters. We have also begun the process of negotiating a socioeconomic agreement. Thank you, Mr. Speaker.

Supplementary, Mr. Yakeleya.

Supplementary To Question 12-15(3): Preparing For Pipeline Development

Thank you, Mr. Speaker. Would the Premier agree to put in place a joint committee with the lead Minister on the governance side and participation from regular Members to address and respond to issues related to the Mackenzie Valley gas pipeline?

Mr. Premier.

Further Return To Question 12-15(3): Preparing For Pipeline Development

Mr. Speaker, that is certainly one consideration I think when we talked about setting joint special committees, the pipeline was one topic that was mentioned earlier on, in the early days of our government. Certainly, I will consider that. I like the idea of a joint committee, and if that's the wish of the Members of this House, then definitely we would give it favourable consideration. Thank you.

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Supplementary, Mr. Yakeleya.

Supplementary To Question 12-15(3): Preparing For Pipeline Development

Thank you, Mr. Speaker. Further, would the Premier commit to assist, in terms of both financial and logistical support of local and regional aboriginal governments, to develop positions to negotiate things such as access and benefits agreements, protected areas, social impact responses and so forth? We really need help in our region with regard to this issue, Mr. Speaker.

Premier Handley.

Further Return To Question 12-15(3): Preparing For Pipeline Development

Mr. Speaker, our interests as a territorial government are within the areas of training, employment, contracting and so on. We are taking the lead on negotiating a socioeconomic agreement. As was the case with the communities in the areas impacted by mining, any impact benefit agreements that they were negotiating were issues that were really within their jurisdictions, so we did not contribute financially to any of the negotiations for those impact benefit agreements. That was something they worked out between themselves and the federal government, and I expect that expectation would be the same in the case of the pipeline. Thank you.

Mahsi cho, Mr. Speaker. I have a question for the Minister of Health and Social Services with regard to cross-cultural training. I am aware that years ago it used to be the practice that we gave our new employees cross-cultural training. In this particular instance, I am referencing Fort Simpson and the health and social services workers. I'm just wondering if there is a requirement or do we have a program that allows them to have cross-cultural training as they get hired into our government to work in the smaller communities.

Minister of Health and Social Services, Mr. Miltenberger.

Return To Question 13-15(3): Cross-Cultural Training

Thank you, Mr. Speaker. Mr. Speaker, human resources offers cross-cultural training, as does the college. But as a department, we don't have a formal policy that directs cross-cultural training being a requirement.

Supplementary, Mr. Menicoche.

Supplementary To Question 13-15(3): Cross-Cultural Training

Thank you very much. Just to follow up on that, I believe it should almost be standard these days, because we are experiencing quite a few difficulties, particularly with our health centre in Fort Simpson which affects all the outlying communities. I would just like to ask the Minister if he's willing to consider beefing up the cross-cultural training that I do believe the health care and frontline workers need to serve in the smaller communities. Thank you.

Minister of Health and Social Services.

Further Return To Question 13-15(3): Cross-Cultural Training

Thank you, Mr. Speaker. Mr. Speaker, the Member has raised a point that identifies a gap and it's not necessarily one that's going to cost a lot of money, but is more a point of providing the appropriate services the best way we can. Yes, I will raise this issue with the authorities and the department, and we will look at ways that we can get more organized in a formal, ongoing way in the area of cross-cultural training. Thank you.

Thank you, Mr. Speaker. Mr. Speaker, I have a question on the budget statement, and I must preface it by saying that I do understand that the Minister of Finance has worked diligently and very hard and it was not an easy thing. I think it is a modest, conservative budget that would hopefully get us on a good financial footing in the future. I realize we're going to have lots of questions in the debates, but there's something that I want to ask a question about. It's on page 14, and this happened to me twice already, Mr. Speaker. As all other Members, when the Minister of Finance is reading the budget, we pay attention to every word and you hear words that you really like. I will read it here. It says: “Mr. Speaker, there is a shortage of affordable housing for both government and industry workers in our communities. Opening up new subdivisions and providing services to new properties is very costly. To ensure enough lots are ready for developers…”

It's like music to your ears. It's like somebody is recognizing the high cost of developing lots. Knowing what's happening in Yellowknife and many other places, wow, the government is going to do something. Then you get totally crushed because the amount is only $300,000 and when you keep waiting and read on, you realize everything is for non-tax-based communities. So I would like to know from the Minister if he has given any thought to any possibility of any assistance going to some of those heated markets where the costs of developing lots are skyrocketing. Thank you.

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Minister of Finance, Mr. Roland.

Return To Question 14-15(3): Lot Development Assistance

Thank you, Mr. Speaker. Mr. Speaker, in the area that the Member has highlighted, this, of course, is an initiative that we're trying to address in non-market communities where it's very difficult right now and a lot of businesses and bankers are not keen to go in because of the high cost and the shortage of dollars and things from communities because of the way they're funded. So this program, through MACA, is doing that one little bit to try to help them in those communities. Members will have an opportunity to address the concerns through this budget process with Municipal and Community Affairs, but we feel that the market communities, tax-based communities, have the ability to develop and sell lots and recoup their costs right now. That avenue isn't available in smaller communities, although we are changing how communities can finance to go forward. So this is one of the initiatives we feel could be taken to try to help them along the process. Thank you.

Supplementary, Ms. Lee.

Supplementary To Question 14-15(3): Lot Development Assistance