Debates of March 18, 2004 (day 3)

Thank you, Mr. Hawkins. Mr. Minister.

Thank you, Mr. Chairman. The $20 million forecast is yet to be discussed in the future budget. I will be going to Members and as the Member for Hay River South had asked earlier about potential options or suggestions, we are looking for suggestions to go forward. We have to look at all avenues that we spend our money on, all programs and services delivered by our government that we have flexibility in. We are going to have to look at those. Core programs and services are going to have to be maintained because some of those are required. They are statutory obligations that we have to meet minimum standards. Those things we are going to do.

There are a lot of programs we do run that are of our own development or are enhanced from the territorial level that we are going to have to look at. We will be coming back to Members with some of those suggestions. Mr. Hawkins has mentioned a number of potential options out there and all those things can be looked at. If this House is willing, that direction is where we go. Those are options on the table. We are going to have to look at every envelope we have to find the savings.

The direction given to departments for travel they were to reduce travel by 25 percent. So departments went back, looked internally and found 25 percent of their travel. Some departments did not take it purely out of travel, but they found some of that money because their budgets are tight in a possible area of funding, either a vacant position or something to try to find that money. They went back and found what would be equivalent to 25 percent of their travel budget. That's travel that's discretionary; that's the key component of that. Thank you.

Thank you, Mr. Minister, and thanks for your questions, Mr. Hawkins. We will now move to Ms. Lee.

Thank you, Mr. Chairman. I have some questions on the opening statement with regard to the insurance issues. I need to know more about this. On the first page, we are seeing a reduction in the amount of $1.6 million plus, because of a reduction in premium costs. Later on, we also see a decrease in our short-term interest costs because of changing estimates of the government's cash requirements. I don't understand this, because from all indications that we have seen we are still borrowing a lot. So I would like to know more details about what this is about. Thank you.

Thank you, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. That is a difficult area. Insurance, to start with, there is a savings there of $1.26 million because of the premium amount we've managed to reduce. But by doing that, we've increased our potential loss just because we're going to pay the first $10 million deductible in that area. We feel that by developing this risk loss area of $330,000 that we can ensure that we don't have a substantial amount of loss. It's not just a pure exercise saving money that we have to do a first loss assessment to ensure we protect our assets.

The area of short-term interest cost estimates, $1.7 million, it was estimated that we would be needing more money for our shortfall and then having to go to borrow. Because of the funding flow that we get from Ottawa and the timing, for example, the timing of our tax payments from Ottawa, the timing of a number of the other payments that are delivered to us, we are right now in a cash positive way temporarily, but we feel that will carry through the year. That again doesn't impact on our actual deficit position; that's the cash flow. The money you have in your bank, but the money is committed. So right now we're in a positive cash position, but the money is committed and we know we're going to overspend our revenues and at the end of the day end up incurring a deficit that we've estimated of $40 million. The way in which we get into the cash position versus a deficit position is fairly complicated, but hopefully that provides some information for the Member.

Thank you, Mr. Minister. Ms. Lee.

Thank you very much. I think we're getting there. I have a follow-up question, Mr. Chairman. On the first, the premium cost has been reduced by $1.6 million. What is the entire amount of the premium?

My second question is if the short-term interest cost savings that we are getting in the amount of $1.7 million, could we rely on that as something that's going to stay a savings for the rest of this fiscal year? How temporary is that? Thank you.

Thank you, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. The insurance cost, the total premium we're estimating to spend this fiscal year in 2004-05, is $2.030 million. So we've made a significant savings of what would have been required if we didn't make those changes. Again, that's $2.030 million as the premiums we've estimated this year.

Again our cash position, short-term borrowing, there are a number of factors that flow in there and can impact on that. If we find ourselves not meeting some of our targets or not implementing some of our revenue options, not implementing some of the potential savings through reallocation of dollars or over expenditure in a number of areas, we could end up finding ourselves going back and borrowing money. So right now our estimates are based on how the cash flows, how much money we have coming in, the timing of payments from Ottawa on the taxes. We feel that we're safe at this point, that we can identify that as a savings. We're hoping that we don't have to go into that area of borrowing.

Mr. Chairman, as well, just further to that, the insurance premiums are finalized later in the year and we'll have the final numbers in June. So what we're putting in is an estimate and we're hoping that that number is accurate. Again, because of the timing of that, we had to put in our best numbers and this is what we feel it will come out as, but if there are any changes we will come forward and notify the House. Thank you.

Thank you, Mr. Minister. Ms. Lee.

Thank you, Mr. Chairman. I've been commending the Minister for two days now for working with realistic numbers, and now I'm being told here we're working with best numbers. So I hope his best assumptions work out here, because the reduction of the insurance premium from $2 million to $1.6 million is quite drastic.

Having said that, I have further questions about insurance in general, understanding that this department not only takes care of the insurance coverage for the government and taking care of the risk management of government assets, but also it regulates the insurance industry and such. I have a question about whether or not your risk management includes the NGOs or any arm's-length agencies or maybe even school boards and health boards. Sorry; I shouldn't combine those. Does your risk management work apply to any of the NGOs, because we understand that some of the NGOs that operate under finances or mostly getting money from the government, they are going through difficult times as well. I would like to know if the government has any say in that.

Perhaps I could just pose my second question in case I run out of time. In the Minister's budget, there was $1.9 million allocated for northern communities' insurance exchange. May I get some more information on that item, as well? Thank you.

Thank you, Ms. Lee. Two questions to you, Mr. Minister.

Thank you, Mr. Chairman. The insurance amounts do cover health boards, education boards. Communities have their own system, and that's the $1.9 million that the Member referred to. That is within Municipal and Community Affairs, and that's to cover their changing insurance program and working with the Association of Communities. So that is included in that, and you will be able to get more detail on that through the Municipal and Community Affairs department when we go through their draft mains.

Again, for non-government organizations on the insurance side of our program, normally they would self-insure because they are outside of the government and are receiving funding through contracts. But as an example, shelters have difficulty paying increased insurance, and they do get funding through the Department of Health and Social Services to cover a lot of that. That's one area they're grappling with right now, is how to deal with those increased insurance costs. I know they're working with the Department of Health and Social Services on that one, in that particular instance anyway. Thank you.

Thank you, Mr. Minister. Ms. Lee.

Thank you, Mr. Chairman. Taking advantage of the remaining seconds, could I ask the Minister for more information about the involvement of the government in terms of helping out the NGOs with their insurance coverage? The Minister made reference to shelters. More specifically, I'm wondering if this section of the government, the Finance department and the insurance management division, is engaged in analyzing the situation and looking at options for the government and the NGOs as to how to address the high insurance costs and how to mitigate that cost perhaps. Thank you.

Thank you, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. The avenue that we work with insurance is strictly with our own assets right now, in setting up that environment and covering our assets with the insurance program that we've put up. We would be prepared to work with the Department of Health and Social Services if they were to come forward and ask for some assistance in looking at what options might be out there. Right now they are working internally, and I know that just because of the situation that I'm aware of from my constituency. So it's not from knowledge through the department itself, but I am aware of that. We would be prepared to work with other departments and deal with NGOs if they were to come forward requesting some assistance. Thank you.

Thank you, Mr. Minister. I don't have anybody else on my list, so I will make one last call for general comments.

Detail.

Okay, detail. The wish of the committee is detail. We'll now turn to page 3-7 in your main estimates binder. Page 3-7 is the department summary, operations expense, total operations expense. We will defer consideration of that and go into the activity summary on page 3-9. Operations expense under directorate. Total operations expense, $1.336 million. Ms. Lee.

Thank you, Mr. Chairman. May I get a breakdown on that $305,000 under other expenses, please? Thank you.

Thanks, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. In the area of other expenses for this budget would fall under…Travel is one of the areas that's in there. For the detail, I will have Ms. Melhorn provide some of that information.

Thank you, Mr. Minister. Ms. Melhorn.

Thank you, Mr. Chairman. For the directorate, that budget item includes items such as travel, materials and supplies, computer services and other miscellaneous administrative expenses of the division.

Thanks, Ms. Melhorn. Ms. Lee.

Thank you, Mr. Chairman. May I get the corresponding numbers to those four items that the deputy minister mentioned? Thank you.

Thank you, Ms. Lee. Ms. Melhorn.

Thank you, Mr. Chairman. I was kind of summarizing; there are quite a few numbers broken down between the finance and administration area and the deputy minister's office. We could provide the detail out of the numbers, in hard copy.

Thank you, Ms. Melhorn. We will allow you to provide that information to the Member and to the committee in hard copy. Thank you. Ms. Lee, did you have another question? Any other questions on page 3-9?

Agreed.

Page 3-11, treasury, operations expense, total operations expense, $4.472 million. Questions? Ms. Lee.

I would like to pose the same question under other expenses, $3.1 million. May I get a breakdown? Thank you.

Thank you, Ms. Lee. Ms. Melhorn.

Thank you, Mr. Chairman. The bulk of that other expense is detailed on page 3-12. Bank fees, short-term debt and insurance premiums. The remainder is a similar type of expenditures that I identified previously: travel, contracts, other administrative expenses.

Thank you, Ms. Melhorn. Will that information be provided in hard copy, as well, for the committee?

If it is the wish of the committee, yes.

Thank you, Ms. Melhorn. Ms. Lee.

Thank you, Mr. Chairman. The insurance premiums in the amount of $2.030 million. Is that the same insurance premium that the Minister was mentioning in which we were going to see a reduction of $1.6 million? Thank you.

Thank you, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. The $2.030 million is the figure we will be paying this fiscal year. That's our estimate, and again it will be revised when we get the final numbers in June. In previous years, if you look at the 2003-2004 main estimates, there we paid $3.6 million. So that's what we had initially paid, and through this exercise we feel that we will be safe in the area of $2.030 million.

Thank you, Mr. Minister. Mr. Menicoche.

Thank you, Mr. Chairman. I don't know if I'm preceding the committee, because I'm looking at page 3-12, if you will permit me. At the bottom it says the above amounts reflect only program delivery costs and does not include corporate and administrative costs. I'm just wondering where do the corporate and administrative costs of the department show up.

Thank you, Mr. Menicoche. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, I am told that that comment on the bottom reflects the fact that the people that deliver, for example, the insurance premiums and so on are not included in that amount. Maybe for the sake of getting accurate information so that I don't get it wrong and confuse Members, I'll have Ms. Melhorn give that detail.

Thank you, Mr. Minister. Ms. Melhorn.

Thank you, Mr. Chairman. What that sentence means is that for example under insurance premium, that reflects only the cost of the insurance premiums and doesn't reflect the other costs of delivering the government's insurance program, which includes the salaries of the staff who administer the program and the other costs associated with that. Similarly to the bank fees or the short-term debt, it doesn't include the costs of the staff who do cash management.

Thank you, Ms. Melhorn. Mr. Menicoche.

Thank you, Mr. Chairman. I was just wondering where it would show up if it's an actual cost to the budget.