Debates of March 18, 2004 (day 3)

Thank you, Mr. Roland. Mr. Menicoche.

Thank you, Mr. Minister. I am wondering overall, budget wise, I am new to this process and I am wondering if you could shed a little bit of light on why the budget was at $960 million when we came to the 15th Assembly, and why there wasn’t a lead up to kind of striving to balance our budget, instead of the predicament that we find ourselves in, which is fine, because I believe it is manageable because I like to look on the bright side too. If the Minister can give me a little bit of history of why the budget was at $960 million without the forced growth issues. It seems that we had planned on a budget that was a deficit even before I got here I guess.

Thank you, Mr. Menicoche. Could I just remind Members that they are to address the questions through the Chair and not directly to the Minister in the form of a direct question. We are all new; don’t worry, I just wanted to mention that. It is a bit of a strange process, but it is what we do. Mr. Roland.

Thank you, Madam Chair. I guess my focus is from the start when we took office and moving forward, previous expenditure patterns by government were made on their assumptions of what they might expect and where they could possibly end up and hoping for new sources of revenue. The amount -- I believe you will find it in the budget address -- that the gap between when we first took office, the potential deficit we might have gotten if we didn’t change anything and closing that gap from almost $80 million on our revenue side versus the expenditure side to bring it down to where we would come in with a $46 million deficit. As you will become accustomed to as we go through this process, the cycles of budget planning start well in advance of the timeline we are now setting down. We are sitting with the final product before us, but the cycle of budget preparation starts early in the spring, in June. We will be getting back to work here in trying to find the next $20 million, as I have stated in the budget address, and try to find more revenues as well. Hopefully the majority of that with the agreement from Ottawa, but as I have seen here we are taking what we have and starting to work from the aspect of what we have on the books today and, as Ms. Lee stated earlier, if we do happen to come up against some windfalls or new and unexpected revenues then we would truly be in a position to benefit from them.

One of the big impacts that we have had, that was a result and now passed on to us is, for example, the corporate tax situation that is paid to us from the federal government. It is collected by the federal government and then paid to us, and they use prior year's numbers to pay us on the upcoming year. There was a couple of large windfalls made in previous governments, and the federal government used the previous year's numbers and said you know you made this much money in corporate tax in that year and we are going to pay you according to that thinking that that’s what would happen. Well, unfortunately that didn’t happen. They came in later on in the year and informed us that in fact our corporate tax earnings were substantially lower and we had been overpaid. That is part of the problem now; having to deal with that overpayment and try to adjust our budgets accordingly. Thank you.

Thank you, Mr. Roland. Mr. Menicoche.

Thank you, Madam Chair. I think my next question would be let's say the windfalls or the extra bonus revenue that we receive, are government the ones who spends it or does it come before the House so we can have some input? I am just wondering how that process works.

Thank you, Mr. Menicoche. Mr. Roland.

Thank you, Madam Chair. The normal process is the one we are going through now. The departments would highlight their requirements for expenditures, whether it be the O and M side or the capital side. If there are requirements for further funding that is over and above what has been identified in the budget process, then the government would have to come forward through a supplementary and request either more revenues for this particular area within the department, or if it is in fact a reduction come in with a negative supplementary. Again, identifying exactly what area from within the budget of the department it would be removed from. Although, for example, we are putting before you the planned expenditures of each department, throughout the year there could be a number of things happen that would either cause them to need more money than has been identified and if that is the case, a supplementary would come in and add to that going forward. So there is an exercise; it would require at the end of the day the approval of the House in doing that. Approval is needed for the main estimates and approval is needed in the House as well for the supplementary appropriations that come before this House.

Thank you, Mr. Roland. Mr. Menicoche.

Thank you, Madam Chair. I am just trying to get a concept of whether we should get our bonus revenue because it is tax time and that we get an extra $20 million. What guarantee do we have that it is put into the cash surplus and not spent before it gets to the House?

Thank you, Mr. Menicoche. Mr. Roland.

Thank you, Madam Chair. Again, through the exercise, if we receive new revenues we would have to change our estimates within Finance to show that there are increased revenues that came forward, and then it is the direction of government if in fact we want to set that money aside for future activities or for a potential part of repaying of whether it be a deficit or expenditure. Again, that would require approval of the House. Any money that comes and flows in has to be accounted for whether it is just in revenue in establishing a reserve that would pay out a certain amount. We’ve got a number of them; for example, our supplementary reserve. We’ve set aside some money knowing that there will be some cost overruns or unplanned events that may occur, we try to budget that in to a certain degree. Not that I am encouraging use of that; in fact, I will be encouraging departments to not use that avenue, but there are areas and times when unexpected events happen and we will have to find the dollars for that. Thank you.

Thank you, Mr. Roland. Mr. Menicoche.

Thank you, Madam Chair. My next question is with regard to when Ottawa announces a new initiative that is cost shared 50/50. I think that's what kind of gets us into trouble, because we don't have the other 50 cents to chip in to begin with, yet we take the opportunity to do it. Does that also come before the House, where we can have input into an initiative that's good but we just can't afford?

Thank you, Mr. Menicoche. I just noticed that I didn't reset the clock at the beginning of Mr. Menicoche's general comments, so you're getting a bonus today. Mr. Roland.

Thank you, Madam Chair. With the cost-sharing initiatives by the federal government, to match those dollars that would be over and above what we have in the budget, then we would have to come forward with a plan and ask for approval of those expenditures. Right now all the money identified in the budget, for example on our capital acquisition plan, is identified for specific projects, and if there is a new program that comes up between now and the end of this fiscal year that would require new money even though it was cost shared, we would have to identify that money and come forward to committee and then to this House for approval of any new dollars. Thank you.

Thank you, Mr. Roland. Next I have Mr. Allen and then Ms. Lee. Mr. Allen.

Thank you, Madam Chair. I want to again raise the profile of some of my correspondence I had with the Minister in terms of new tax initiatives; not tax changes to increase personal tax and other methodologies that were suggested. I think it's important to concentrate basically on pages 6 and 7 of the Finance Minister's address yesterday, and try to conceptualize where he wants to fit it into the opening remarks today.

I believe we all recognize the difficulty he has with Finance Canada in trying to come to a conclusion on the formula financing agreement; we're all aware of that, territory-wide. I’d just like to raise the point to the Minister that we're certainly concerned from a constituency perspective. I think we've heard a lot about our inherent costs in trying to meet the obligations of this government to deliver appropriate and sustainable program service delivery. That's why I raised the point -- and I will reiterate that in my correspondence to the Minister -- that we should really look at Bill C-48 as a mechanism to deal with aboriginal self-government, to see if they would cost share many of those program service deliveries as they have the capability, as well as through land claim agreements and other funding agreements with the federal governments.

Somehow it bypasses our government coffers and sometimes in treaty entitlements, for example, and other different modes, we see the people in the Western Arctic make huge announcements on human resources training and employment that goes directly to aboriginal groups. So certainly I want to speak a bit on some of those processes, and later on I will ask the Minister some questions on the validity of those transfers and how they will affect our fiscal situation.

I strongly believe that we have very little capability in negotiating directly with Finance Canada, Madam Chair. I think we need to find a way as we continually hear different departments respond to questions of what causes us to have increased costs to this government. Certainly recognizing his points in the budget address, respectfully I feel somewhat compelled that we need to look at different methodologies to address Finance Canada and see if we can somehow put them on the block here where we can somehow force the issue.

I think myself, as well as other Members of this Assembly, are concerned that as long as we are in a deficit budgeting process, we will continue to be under pressure from the constituents to try to introduce new initiatives that would help the Minister overcome some of those deficits. I look at some of the areas in terms of how we will deal with other local governments and also aboriginal governments, and we talk about how we should work together in trying to get some departments looking at putting people back onto the land so they become resourceful again, for example. It's a very minute investment that will return greater net results, simply because there will be less pressure on social expenditures.

It has also been raised to me many times -- and I raised it again yesterday in my reply to the opening address -- we really need to look at a comprehensive review of our programs and services and look at some of the efficiencies and some of the cost analyses of trying to reform them. At some point, I'll ask the Minister if he will take a lead role in looking at this in the context of the costs and will he look at his discussions with the federal government in trying to deal with our fiscal situation.

I realize it's long term, but I still think we need to plant the seed today so he can incorporate it into his 2005-2008 business plans and modify his tax system to truly address some of the key problems we have. I don't beg to differ on the Minister's budget speech, but certainly, in a helpful way, hopefully we could work as an Assembly and try to look at issues such as zero-based budgeting, for example, and tax rate initiatives is another example, giving older workers the ability to retrain so they can become productive in their small communities. It worked well in the past; I think there's still the possibility it will work well again in the future.

Also I think in terms of the fiscal strategy, Madam Chair, we really need to ask you to deal with that at the Circle of Northern Leaders meetings so that they understand precisely where we're at to know their capabilities to support their own initiatives as they come to us quite often.

If I may speak briefly before I conclude, Madam Chair, when we talk about devolution, I'm still concerned about the proposed transfer of dollars in terms of the cash quantum. In my many meetings with my colleagues from the Yukon, they always emphasize that we should not go into the devolution process or the resource revenue sharing process without some definite and very definitive legal obligations. I think quite often we use the word "a covenant." That would establish precisely what our entitlements are. So I just want to say that I think being helpful in the long-term discussions, we need to look at that as one of the very important aspects of the future negotiations and the fiscal framework agreement with the federal government in terms of how you articulate the need for resource revenue sharing and also trying to find solutions to the many problems we are confronted with.

So, Madam Chair, to the Minister again, hopefully you find my suggestions helpful and we will be able to work with you in the context of your trying to resolve our fiscal and our financial problems, not only today but as we go towards your objective of having a balanced budget by 2006-2007. With that, I conclude my statement, Madam Chair. Thank you.

Thank you, Mr. Allen. Mr. Roland.

Thank you, Madam Chair. The Member raises a number of ideas and points of discussion, and I would agree with him on a number of them. Our formula financing agreement is a very difficult process in terms of trying to have the federal government agree with our arguments and situations. We have continued to work and put our best-case scenarios and business cases forward.

What seems to be becoming more of a norm now is to have any movement require political decision, and we need to continue to do that. I think that's how we can work with our northern leaders; if we can get everybody understanding and working with the numbers that we have available to us, they can help us when it comes down to making our arguments in Ottawa and going forward on that basis. So, yes, to establish the understanding with the northern leaders as to our fiscal situation is critical in building our argument. It not only impacts on the delivery of existing programs and services, but it also impacts on what they would like to see growth in, or to see expand or support their initiatives.

Right now we're having a very difficult time just keeping what we have going. In fact, we're having to now make those decisions of what areas we can look at foregoing in the sense of continuing on, and then put that money into higher-placed priorities. That exercise will continue.

As I stated earlier, we will begin the next budget process in the very near future. I will be counting on Members as well as northern leaders to try to help find ways of using the dollars we do have in a more effective and efficient manner. That would require looking at all our existing programs and services and having to make some tough choices. But if we're going to meet our goals and become more sustainable in the future and have something for our children, we're going to have to make those choices. Building a team to do that, going forward with all the leaders and people in the Territories, is going to be critical to that.

On the tax initiatives, I'm looking for areas that we can improve our tax system. When I took this job, I didn't take it with the idea that all I would do is go after existing resources and the people in the Territories and tax them. That wasn't the goal that I had stepped into the job with, but unfortunately it is the reality with the short time frame that we have available to us.

Again, looking at what we have available to us under taxation and the authority we have, we will continue to investigate those. We will be looking at alternatives in the future if our estimates or our assumptions don't pan out with formula financing, then we will have to start expanding and broadening our vision in where we might be able to get new revenues from. But that is something we're going to have to go into and go into cautiously and make sure we have the right tools and the right agreements in place.

As the Member stated, using the Yukon as an example, we have to ensure that if we continue down that path of devolution and get an agreement on resource revenue sharing, we must get the best deal possible for NWT residents. We don't want to get into a deal where we can stand up and wave a deal we have in the air, but it really means nothing to the resources that flow to the North. We have to continue to work with that in mind: what benefits the future of northern residents. That would require having a solid effort coming from all fronts in the Territories. I think gone are the days that we can go it alone and take that stance. Self-governments are becoming more and more a reality, they are emerging, we have to find ways of working together. After all, we are all working together for the benefit of 43,000 people in the Northwest Territories. Thank you.

Thank you, Mr. Roland. I had Ms. Lee, Mr. Yakeleya and Mr. Delorey. Ms. Lee has indicated that she would defer to the Members who haven't spoken yet, so I'll go next to the Member for Sahtu, Mr. Yakeleya.

Thank you, Madam Chair. I hear from my honourable Members that you go through the Chair, so I'll say it again, Mr. Roland…

---Laughter

Excuse me. Sorry about that. I have a question for the Minister, Madam Chair. Like my honourable colleague from Nahendeh, I am also new at this process here and sometimes it seems like it's my first day in school here in front of the principal. However, I am going to continue on with the process and just take the words from the Minister of Indian Affairs that I'm in a learning experience, a learning process. So I'm going to take his advice and his words from this morning.

I want to ask a question regarding the budget address that you made yesterday with regard to preparing our communities to face the realities of the fiscal obligations of the Northwest Territories that we have, the responsibility. We are preparing ourselves in the House here when we go through the exercise of deciding a strategy for the department to prepare our people in the small communities; the down-to-earth, day-to-day people who pay taxes, go to work, who come to talk to us as the Members of the Legislative Assembly, in terms of educating and helping them to also deal with this reality. They will get mad at us. Why are you increasing our payroll? Why are you increasing the corporate taxes? How come the Northwest Territories is so rich in its resources, yet Ottawa is taking a whole bunch of it?

So in plain English, in plain language, how do we educate and help our people get on our side and say that there's a bigger picture here and how do we work all together? That's going to be our responsibility, I guess, in terms of helping our people in the smaller communities understand the process that we have been undertaking yesterday and today. Thank you, Madam Chair.

Thank you, Mr. Yakeleya. Mr. Roland.

Thank you, Madam Chair. There are a number of avenues that we will take and use to get the information to people and continue to provide them with the information to ensure that they feel that they're getting all that is required to understand our situation. I think that started in a large way yesterday by doing the budget address and highlighting that message to our people in the Territories of the impacts of what this budget means to them. As we go through this process in the next two-and-half weeks, as Members ask questions of departments and ask for the detail, that information then can flow through this process, with the media, through phone calls to people back home.

I agree; it's the bread-and-butter issues that people are worried about. It's not the fancy documents or the Bill 1 Appropriation Act that really means something to them. What it means to them is, at the end of the day when they sit down at the supper table, they can still afford to feed their children, still afford to pay their bills. That's something that we've taken and considered as our first step in this process, is to try to mitigate the impacts on residents in the Northwest Territories. For example, as I've mentioned in the payroll tax, we're increasing the payroll tax but we're also adjusting the two lowest brackets to reduce the impact on residents in the Northwest Territories, especially those with incomes lower than $66,000. As well, we are increasing the cost-of-living tax credit through that process, again to minimize the impact on those with low incomes in the Northwest Territories. We looked at a number of other initiatives and, based on comments from Members, we decided that they were not wise to move forward with because of the impacts they would have on residents.

So through this process we are starting to get the information out, get the message out, this is what the budget means, this is the impact in their communities. At the end of the day, what my message will be to people in the Territories is although we are making difficult choices, we are making them so that we can in fact protect what we have built up in the Northwest Territories over the years. For example, we have invested a lot of money in educating our children in the Northwest Territories, and we invest a lot of money for adult education, and we want those people to benefit from the jobs that are available here in the Northwest Territories. So if we go through this exercise and start to look at cutting so drastically that we undermine all of the work of the years before in trying to build up residents so that they can take those jobs, I think that is one of the things we need to keep in mind.

This whole exercise is not going to be a pleasant one. There will be some times I think we will find a silver lining in the clouds, so to speak, that we get some good things done. We are still spending $1 billion. The budget has grown by just over $20 million from the prior year. So we are continuing to invest in important initiatives. It has not just been a carte blanche, cut exercise. We are trying not to do that. We need to be more systematic, more surgical in what we do. As one of the Members, I think Mr. Allen, talked about a zero-based exercise; well, that may be a tool that we’ll need to use to try to find and be more surgical in what we can find for revenues out there and still deliver programs and services for the people. That is why we continue to put our arguments forward to the federal government, is to ensure that we continue to build up the population of the North so that they can better take on the responsibilities they have as parents, as teachers and educators, as health care providers, and that is the message we need to continue to get out. Whatever we can do to help get that message back home to individuals will happen. Thank you.

Thank you, Mr. Roland. Mr. Yakeleya.

Thank you, Madam Chair. The people in the small communities and the communities around here can surgically skin a moose pretty well. We know how, we have the creative initiatives and, as Mr. Roland said, they want to surgically look at the budget here. Giving the people in our regions some flexibility in terms of looking at the fiscal realities in our communities, we could do some good work in terms of how to save money, how to share cost money, and how to put money to good use. I think there could be some incentives for communities to go through that exercise. I think we are big enough now and we have enough training.

I think the point that Mr. Allen was leading to, and I would like to talk to, is the aboriginal governments, the communities, and this government looking at how we could deal with the formula financing with Ottawa. What they are doing is just not right in taking our dollars out of here and giving us back only a few pennies. It has to stop. People are saying that, why don’t you guys stop it, you are government, do something about this otherwise we are going to continue holding our hand out. If we do this, then the communities are going to continue doing this too, holding their hand out for one of the programs we want to take over and they need the dollars to back it.

Madam Chair, just a comment in terms of supporting the Minister in all of his initiatives to go get the dollars out of Ottawa. Senator Nick Sibbeston wanted to do a name change and I said you know we should be calling ourselves Robin Hood because Ottawa is robbing from our land. That is all I have to say. Thank you.

Thank you, Mr. Yakeleya. Mr. Roland, do you want to make any response to those mostly comments, not too many questions there?

Thank you, Madam Chair. I will keep it short. I agree with what the Member is saying. We need to continue to find ways and work together in the Northwest Territories. I think that is the northern leaders' aspect of how we can work together and put our arguments forward to Ottawa and can benefit all of the residents of the Northwest Territories. It is not about us and them, it is about we, how we can together work and go forward and put that business case in Ottawa about the revenue situation.

Again, as I stated, as a government we will have to look at our own power we have now to do things. We don’t have the power for royalty revenues. What we do have is an ability to tax and we have to look at all that is available to us to ensure that in one form or another that we, the residents of the Northwest Territories, are benefiting from large development and ensuring that our people in the Territories are getting jobs and training so that they can take advantage of some of those higher paying jobs. So we will have to work on that and I will count on the support of Members. If there are ideas out there or support for some ideas, we need to work on those together to see what is the best way to bring some of these things forward. Thank you.

Thank you, Mr. Roland. Next on my list I have Mr. Delorey.

Thank you, Madam Chair. Just a few comments. Everybody is tying the opening comments and the budget together. I just wanted to mention a few things. The Minister is right when he says that yesterday was the first step, especially in these initiatives for revenue generating by putting it out there in the budget. It seemed to be accepted fairly well yesterday, I didn’t hear too much in the Great Hall afterwards.

However, I did get about three calls today that are very concerned about the government starting to introduce taxes. As soon as you mention taxes, we can do all of the explaining we want, but what the people out there see is added costs to the cost of living. I can see that taxes are not good, they are no good at any time and I know that we don’t want to do it. It becomes an act of does it benefit us enough to make it worthwhile doing. A lot of these we are hoping they are going to bring in some revenues to the government and we’ve put some projections out there. But I am really concerned when we look at the personal income tax. I think we are looking at hopefully generating close to $1 million with that. If it includes any administration whatsoever, we are doing it for absolutely nothing. We are just putting taxes out there just to, I think, upset a lot of the people. I certainly have some concerns in going back to my constituency and talking to them about increased taxes. I know we’ve tried to do as much as we can to mitigate the effects on lower income families, but if we have to give it all back to make it feasible, then there is not much sense in doing it. So I don’t know how much administration cost there will be, added administration costs if any, but I will tell you from the way I look at it, it wouldn’t take very much to totally mitigate anything that we are going to gain from those taxes. I don’t think we have started to hear back yet from our constituents as to what they think on these taxes. I think we have already heard from one large corporation that says they will be filing their taxes outside the Territories because they have an office somewhere else. That could be possible and we would lose there with corporate taxes.

My question is on the cost of insurance premiums. This is an industry that seems to be running out of control, this insurance. I don’t think that our government has a lot of say into the insurance industry but, again, I see that you identify $1.624 million of savings in insurance premiums, and then you go on in the next page to say that because of taking on the responsibility for self-insuring, the government is taking on a lot more for risk, and a portion of that savings will be re-enlisted into strengthening this program of risk control. Again, if we are going to be setting up a whole bureaucracy again now for risk management, how much is that going to cost us if we are saving $16 million and we spend $2 million? Do we have any idea what we are looking at when we say a portion of this premium will be put back to risk management because of the added risk that the government is taking on? Again, are we really doing this to save money or are we just going to spend it somewhere else? Thank you, Madam Chair.

Thank you, Mr. Delorey. Mr. Roland.

Thank you, Madam Chair. Before I get into that specific issue, there were a number of comments the Member made about our revenue-generating initiatives. Yes, they are difficult and nobody likes the idea of increased taxes or new taxes, but if we don’t get it from the corporate citizens of the NWT or Canada, then we end up focussing on the private individual which would be much more difficult.

The fact is the federal government measures our tax effort and because we are not measuring up to what they think we can generate for revenue in the Northwest Territories, we are penalized on that. So we have to take some steps in that area to ensure that we are going to protect the revenue base that we do have. It’s not a good thing. As I stated earlier, it’s not something I came into the job looking at as a target, but it is part of the puzzle we have to put together in trying to move forward and protect the programs we have for residents in the territory.

On the administration side of it, because these are existing programs, there are no increases in the administration. The federal government collects the taxes for us and remits them back to us. It would be a different case if we did that all on our own, but because the federal government does that for us it lessens the impact of administration.

On the specific question of insurance premiums, it is an area where we have been hit hard. As I have stated, we reduced our loss record over the last number of years, but our premiums were still jumping significantly. So there was an exercise done to see what we can do to mitigate those costs. We’ve identified a savings of $1.6 million, but from that $1.6 million, we are taking $330,000 and reinvesting it in the area of risk management. To achieve that level of savings, we’ve had to increase our own deductible. We’ve increased it a significant amount and by doing that, we have to now make sure we are managing and ensuring that our risk loss control measures are adequate so we don’t end up losing a lot of our facilities. So we’ve had to step it up on that side, but we’ve seen that as an ongoing savings. We just need to make sure we have the right monitoring in place so we don’t lose out and end up paying our own deductible if we don’t take care of our facilities.

Thank you, Mr. Roland. Mr. Delorey.

Thank you, Madam Chair. Is all of the government under the self-insurance program now? Are all government assets under self-insurance programs now? Thank you, Madam Chair.

Thank you, Mr. Delorey. Mr. Roland.

Thank you, Madam Chair. All government assets are covered under our insurance program. We are self-insured for the first $10 million, but we do buy insurance for over and above that. So on an annual basis, if we had losses of some small equipment in a community or region of a few hundred thousand dollars, we would end up paying for the full shot of replacement. That would happen until we hit the $10 million figure. Then we would kick into our insurance program that we paid for. So it’s a cumulative amount. It’s not going to be on every case, but it adds up to that first $10 million we would end up having to pay for. So if we had some losses of buildings or infrastructure of $1 million or $2 million, we would end up paying for that up front until we hit the $10 million figure. Once we hit that figure, then our insurance program kicks in. That’s where we have our savings. That’s why we feel it’s important to increase our risk side of our equation to make sure that we don’t end up paying a lot more. Thank you.

Thank you, Mr. Roland. Mr. Delorey.

Thank you, Madam Chair. In the area of our fiscal arrangement with Canada on the formula financing agreement, I know that we are in the process of renegotiating that. I don’t know what the timelines are or where we are in finalizing that, but I would like the Minister to tie in…The first bullet is finalizing the discussion with Finance Canada and changes to the formula financing agreement, then the fourth and fifth paragraph deals with providing taxation for formula financing input and resource revenue sharing discussions with Canada and aboriginal governments. There are two bullets that contain fiscal taxation input to self-government negotiations. How do those bullets tie together with negotiating the formula financing agreement with Canada?

Thank you, Mr. Delorey. Mr. Roland.

Thank you, Madam Chair. The first one, finalizing discussions with Finance Canada on our formula financing agreement, that’s strictly with ourselves right now, the GNWT with the federal government. There have been some discussions with aboriginal governments saying they would like to be involved in the process. Finance Canada is not willing to have that approach taken, so we have continued as a territorial government to take that on as our own initiative as it results in the transfers to this government to operate existing programs and services.

Providing taxation and formula financing input to revenue resource sharing discussions with Canada and aboriginal governments and the next bullet, continued fiscal taxation input to self-government negotiations, those are tied together. Self-government tables are discussing taxation initiatives, sharing tax room. The federal government has agreed, for example, with the Tlicho to look at giving up some tax room to them and that then puts the pressure on us to look at what we are doing in the Northwest Territories and how that would impact on us in the Northwest Territories. So there is that ongoing side of the taxation with self-government discussions. There is talk right now at a number of the tables of taking the tax room available and using it for net benefit for their own programs and services. What we say is we would look at tax sharing, but along with that tax sharing comes the burden that’s with it now, running existing programs and services. The territorial government right now, as we all know -- that’s why we are having to reduce programs and reallocate dollars -- can’t afford what we are doing today. So we have little to no tax room to give up.

We say if they want to take some of the tax room, then they have to take the corresponding amount of burden with that and moving forward in those directions. It’s still very early in the discussions, but that’s something we have to be prepared to look at as the territorial government. Again, what agreements the aboriginal governments make with the federal government can have an impact on us, and we are going to the federal government and discussing with them those potential impacts and asking them to be ready to mitigate those impacts on the GNWT when they give up the tax room and give up some net fiscal benefit to aboriginal governments. We have to be the backstop because we don’t have the dollars to continue programs and services if the federal government foregoes some of those taxes. Thank you.

Thank you, Mr. Roland. Mr. Hawkins.

Thank you, Madam Chair. First I want to make an observation. When a Member has a very good question, I seem to hear the click and it appears the Minister is reading from notes. So I have to compliment his staff on his excellent replies back.

Madam Chair, I just happened to notice under expenditures and categories, it does cause me some concern when I read under grants and contributions, 42 percent of the budget goes to grants and contributions. When we are scrambling to make adjustments with our payroll tax and just tax in general on people, it causes me some stress that we could have evaluated our grants and contributions just that little bit closer if we start looking at playing with our taxes.

Madam Chair, if I may, one thing I noticed earlier in the budget is we talked about reallocation of $15 million from low priorities to high priorities. If the Minister would do me the honour of telling me what were the low priorities in general and some specifics and telling me some of the high priorities. My concern is are we losing some very valued programs which were referred to as the low priorities? Thank you, Madam Chair.

Thank you, Mr. Hawkins. Mr. Roland.

Thank you, Madam Chair. I would like to thank the Member for complimenting the people here with me, as they have worked hard to prepare the documents now and the main estimate the Member uses. As well, I would like to inform the Member I have been referring to the opening remarks I have made and I actually thanked my people here with me because they have worked hard to make sure I had the information to go over and make myself very familiar with this. So it is a team effort. Like what I have been saying about the process we are going to go in, it’s a team effort.

The grants and contributions area that the Member has raised -- and I believe he’s referring to the summary of the main estimates document -- that funding goes to health boards, education boards, through block funding to municipal governments. That funding, a very large amount of that, goes directly to providing frontline services to individuals in the territory. So Stanton Health Board, Inuvik Regional Health Board, the Sahtu one that is being created, that is going to frontline workers in hospitals and health care workers, social workers, education authorities are getting those dollars, municipal governments are getting transferred those amounts through block funding arrangements. So a lot of that is in there.

In the area of losing some critical programs, unfortunately, because of our situation, as departments review their funding allotments, they are going to have to look at the programs they deliver and some of those are going to be offered up as potential areas of savings. Any reduction of programs is going to affect residents in a way that is not liked and won’t be supported by those individuals or groups that see those reductions. But, unfortunately, that is where we are today; having to face those kinds of decisions and going forward. In fact, we are going to be facing more of those. Thank you.

Thank you, Mr. Roland. Mr. Hawkins.

Thank you, Madam Chair. I notice three-and-a-half minutes of my time was lost there by hearing that that money is being allocated to health, education and municipal areas. We didn’t get any comments on what some of the low priorities were. While I am at the mike, I would also like to get some of those examples and references rather than just programs. The honourable Minister references that a five percent cut hasn’t been restored. We are arguing that we want $18 million of the five percent. I think he knows what I am referring to. Is there any indication that our government is being led on or is there any indication that our government has a chance of getting this five percent cut restored? I would hate to see our Minister spend valuable time on this topic if we have no hope of getting this money back. Thank you.

Thank you, Mr. Hawkins. Mr. Hawkins, you didn’t lose three-and-a-half minutes and you can spend many, many more. We can come back to you after your 10 minutes is gone. I can reassure you, it’s not limited to 10 minutes. Mr. Roland.

Thank you, Madam Chair. In the area of formula financing, that is something that is critical to our government in trying to come up with new revenues that we have put forward. Specifically on the five percent reduction area, I believe we have a very good business case. I have had a discussion with the federal Finance Minister on this area. He’s told me two things that he is not going to stray from; one is he will not bring in a deficit and, two, he will treat everybody equitably.

For me, there are a few messages that aren’t so positive; one, we are running a deficit and, two, equity is a concern to us because we are not the same as southern jurisdictions. We are not the same as Alberta, B.C. or Ontario. It’s a principle we have to live by and on that one, I think we can show that it is equitable that we get that five percent put back into our base because they have brought the numbers back up to 1996 numbers. That hasn’t occurred in our case because CHST again doesn’t impact us the same way as it does in provinces.

With the jurisdictions having their numbers brought up in that case, it’s only right in having equitable treatment to have that restored to our base. I don’t think it’s a lost cause and I guess I will bring in my hockey experience. You don’t quit playing the game until the final buzzer goes and that’s my intention. If we have a chance of getting some new revenues through our solid arguments, then we will continue to put them forward. There will come a time in some of these other initiatives we have that we are going to have to say it’s not achievable in this time and we must look at other initiatives. There are times when we are going to have to look at what we are doing as a government and decide at that point if we should further travel down that trail or change our direction. Thank you.

Thank you, Mr. Roland. Mr. Hawkins.

Thank you, Madam Chair. Thank you, Mr. Minister. The Minister indicated that next year we would have to be a little more aggressive, to the tune of $20 million. I am looking for a forecast of what we may expect. Is it the Minister’s intent that we could be looking at hiring freezes, wage freezes, discussions with the unions on drastic changes? He set out a very passionate and aggressive target for himself, which I admire. In his position, you have to be good. So I am waiting with glee to see some of these ambitious projects. Are hiring freezes, wage freezes or discussions with unions some of the examples we will be looking forward to seeing?

There was a 20 percent government cut in travel and, as I see it, this was the low fruit bearing from the tree. It was dangling there. What I saw here is we have just over a $3 million reduction travel, but student travel and medical travel was not cut. Even though those two areas were not cut, does it still reflect an across-the-board total of travel with the Government of the Northwest Territories and its related programs? Does that still reflect a trueness of 25 percent, or is it the intent that every department that gave up money was 25 percent? Thank you, Mr. Chairman.