Debates of March 19, 2004 (day 4)

Thank you, Mr. Delorey. Mr. Minister.

Thank you, Mr. Chairman. We feel that the other areas are secured. We continue to monitor the operations, ensuring that our guarantees…We're hoping that they are not going to be exercised. There have been strong provisions put in place to protect our position. Most guarantees provided that working capital draws must be margined against inventory and accounts receivable. So we've done a fair bit of work. Parent companies and owners must cross-guarantee the GNWT. It is a complicated process and we've had complaints on the other side that it's a very cumbersome, complicated process, but that's for a reason: to try to protect our side of the books.

The loan guarantees are secured by things. There's an assignment of accounts receivable, assignments of inventory, fixed and floating debentures against all assets of the company, and where there's a parent corporation which is providing a cross-guarantee a similar security is provided by that parent company. So there are a number of those things involved. Although in any guarantee situation, there are events, as what has occurred in this last one, that a company may fail and we are then required to go into it and try to collect on those things. In this case, the decision was made that we felt the best decision possible would be in getting an agreement to have the full principal amount paid, forego the interest, and still have the operation going and employment happening out there. So there were a number of factors that came into the decision. Thank you.

Thank you, Mr. Minister. Mr. Delorey.

Thank you, Mr. Chairman. Mr. Chairman, could the Minister tell me…I think I heard him say that he feels all the other loan guarantees are pretty secure. Is the Minister fairly confident that all the other loans are on good standing and there is no danger of them having to be called on for these loan guarantees? Thank you, Mr. Chairman.

Thank you, Mr. Delorey. Mr. Minister.

Thank you, Mr. Chairman. The last check we've done, we feel we're still secure. One of the reasons that we end up holding these guarantees is because it is considered a new industry in the Northwest Territories and the banks themselves are nervous to go in and loan without the backup of our government when these companies go forward. So we've done what we feel we can with due diligence and ensuring that we're protected, but there is risk attached to that and we see the result of one of those occurrences where we've had to make an agreement to receive the principal back but forego the interest. The option is there if we wanted to absolutely go after the assets or the receivables or the inventory. That option is there. That’s part of the guarantee in this case. The government had decided that this course was the best one to go on. Thank you.

Thank you, Mr. Minister. Mr. Delorey.

Thank you, Mr. Chair. There were a couple of others areas I was going to ask questions on, but it’s been brought up and it’s addressed in our committee report as well, especially in information technology and projects. We always see increases in there. On the $294,000 reduction due to winding down of equal pay settlements, if it’s winding down are we done with equal pay settlements or is that still an ongoing issue?

Thank you, Mr. Delorey. Mr. Roland.

Thank you, Mr. Chairman. Right now, we are continuing in the winding-down portion of the category we are working on. There are individuals who worked as casuals for the government and we are still trying to track down some of those individuals who haven’t been found that were past employees of the government. We are hoping to have that concluded by the end of this upcoming fiscal year. Thank you.

Thank you, Mr. Minister. Mr. Delorey.

Thank you, Mr. Chairman. Just one final comment on the reduction of $926,000 for the transfer to the NWT Housing Corporation. Is there an offsetting amount? Is there anything that shows up in the Housing Corporation’s budget that ties into this figure? Thank you, Mr. Chairman.

Thank you, Mr. Delorey. Mr. Minister.

Thank you, Mr. Chairman. As indicated, that is a transfer to the Housing Corporation. So that amount will show up in the Housing Corporation envelope as they take on the last part of that program that used to exist. So you will see that exact amount show up in the Housing Corporation budget.

Thank you, Mr. Minister. General comments. Mr. Yakeleya.

Thank you, Mr. Chairman. I want to speak to the way the trend is going in the Sahtu region. In the Minister’s opening remarks, we see the funding of staffing of 103 in headquarters, presumably Yellowknife, and 27 in the regions. I would like to ask the Minister about the reallocations. The Sahtu is in the Inuvik region but slowly, with the creation of the Sahtu health board and some other things coming in, we are becoming a region ourselves. There are many government departments in the Sahtu. I think it would be very effective if the presence of the Financial Management Board was in the Sahtu with all the different departments in our region. Maybe the Minister can reallocate a position to the Sahtu under the FMBS. Mr. Chairman, I want to ask that question to the Minister for him to consider this in the future, to reallocate a position from FMBS to the Sahtu.

Thank you, Mr. Yakeleya. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, we monitor all the regions for the amount of work required and the commitment required to maintain the level of service that’s provided. Once again, as other Members have stated, part of what we need to do as a government is to make sure we operate effectively and efficiently through the delivery of programs and being that we deal internally with other departments, it’s very much a centralized function around payroll and the financial end of things. So there is not a lot of opportunity. Right now out of the Sahtu, much of their services from all the departments are still handled through the FMBS office in Inuvik, but we are, annually, looking at the requirements placed on the staff. We look at when there might be a need to re-jig the lines or move some positions around. That would be considered. It’s an ongoing process and right now that’s not scheduled in this budget cycle.

Thank you, Mr. Minister. Mr. Yakeleya.

Thank you, Mr. Chairman. I appreciate the re-jigging the Minister has to do on an annual basis. Looking at the situation in the Sahtu, I think that the Sahtu is large enough and needs to be seriously considered as almost a stand-alone region. We’ve always been under the arm of the Inuvik region and the Inuvik region is a big region. It’s almost 14 communities and sometimes we don’t feel in the Sahtu that we receive the quality of service that we deserve. That’s why we ask in the Sahtu that we have a stand-alone region. The creation of the Sahtu health board is one step to that process.

With the priority and the level of the Financial Management Board, this government needs to consider having an office in the Sahtu to work with us. That’s a comment to the Minister and his staff in light of what may happen in the next few years or further down the road, we would like to have a region and like to not be governed or taken care of in the Inuvik region which is in Inuvik. I think that’s something I am going to keep questioning this government on and this Minister and ask if he would give that some consideration down the road. Thank you, Mr. Chairman.

Thank you, Mr. Yakeleya. Mr. Minister.

Mr. Chairman, as I stated earlier, we continue to monitor the workload and requirements in each of the regions. When that is increased to a sufficient amount, we would look at transfer of positions to ensure that we continue to meet that demand placed on the Financial Management Board Secretariat. As well, in this area, we should make the point that as the Sahtu is developing, a lot of that is a result of the self-government discussions that are ongoing right now in the Beaufort-Delta. The government has been proactive in the sense of preparing the Sahtu after self-government discussions are completed and the fact that they do move ahead in the Delta region.

One of the things as well is we stated that the federal government needs to be included in this thing for capacity building, but you can say in a roundabout way we are taking on that burden right now by establishing the health board and by moving more departments and setting them up. As the workload increases, we are monitoring that. When that workload becomes a high enough amount, we will look at establishing a position or two in that region. Again, it’s trying to be effective and efficient. In delivering what dollars we have available, we have to be very careful to ensure we meet those priorities that we set as a government. As well, we need to continue to work with the federal government to have them come up with some of those capacity dollars that we can prepare these regions for further development. Thank you.

Thank you, Mr. Minister. Mr. Yakeleya.

Thank you, Mr. Chairman. Encouraging words from the Minister. That’s the point that I also wanted to talk about, is preparing the Sahtu region in terms of becoming a sustainable region. I know the federal government is a key component to helping us out here. If there’s any mechanism or way that we can work closely with this department and the Sahtu people and put pressure on the federal government in terms of owning up to their obligations in terms of the land claims and self-government agreements and the ability to have the Sahtu region become a stand-alone region, I know it’s going to come in time, but it’s encouraging to hear from the Minister. I just wanted to make those comments, Mr. Chairman.

Thank you, Mr. Yakeleya. Would you like to respond, Mr. Minister?

Thank you, Mr. Chairman. I’d just like to thank the Member for bringing his concerns to us and I look forward to working with him and providing a level of service that’s adequate to the residents in his jurisdiction, as well as being effective as a government on how we spend those dollars on behalf of the people. We’ll continue to monitor and work with the federal government, as well as with our own partners here in the Northwest Territories. If we can work together, I’m sure we can build a solid case going forward to try and have the idea of capacity on those issues dealt with by the federal government. Thank you.

Thank you, Mr. Minister. Further general comments? Detail. Turn to page 2-37. Page 2-37, program summary, we’ll defer that for now. Go to page 2-39, activity summary, directorate, operations expense, $4.999 million. Ms. Lee.

Thank you, Mr. Chairman. In keeping with my notice that I gave yesterday, I would like to ask for the breakdown on the other expenses of $1.142 million. Also, maybe I should just add here that there were a couple of breakdowns for other expenses that I asked for under Finance. I appreciate that that department has been dealt with, but given that we have the same Minister here, I just want to get a commitment from him again that he will provide me with those breakdowns that weren’t provided yet. Could I get a breakdown on this particular number, please? Thank you.

Thank you, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. Yes, we will have that provided to the Member from the other department. In this section of directorate, I believe the Member is referring to the $1.142 million and breaks down in this way: travel and transportation, $173,000; materials and supplies, $54,000; purchased services, $89,000; contract services, $133,000; fees and payments, $4,000; other expenses, $689,000.

Thank you, Mr. Minister. Ms. Lee.

Thank you very much, Mr. Chairman. So we have other expenses under other expenses. I just want to make a point here, Mr. Chairman. I wonder if the Minister as Minister of Finance could comment on whether or not there is any better way to be more transparent in the way we debate and pass budgets, Mr. Chairman. I do believe that the exercise we’re engaged in here is very important. This is the money that we’re approving for the government to spend on behalf of the people and the least we could do or ought to be able to know is what it is that we’re allocating the budget for. I understand that you can only put so much on this booklet called main estimates and there is an agreement as to how we are going to categorize them and the four main areas that we have are compensation and benefits, grants and contributions, other expenses and amortization. I know that in many cases the grants and contributions section is very well laid out. I mean, something as small as $10,000 in grants are laid out. But for some reason there’s a practice, and it seems to be accepted, that other expenses items will go unnoticed or at least it continues to be lumped up. FMBS is one of the smaller departments in this area, but as we move on we’re going to see divisions in some departments under other expenses that amount to millions of dollars and I think it’s incumbent on all of us to know what it is, how those dollars are allocated. I would further submit that it’s the Minister’s obligation to show us. Having said all that, can I now ask for the Minister to give a breakdown of what the details are under other expenses in the amount $689,000? Thank you.

Thank you, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. I had to ask what the other expenses were, as well. They are for the TSC and the systems and communications chargeback. So these are chargeback amounts for systems and communications, as well as the TSC services for the whole department.

As well, taking the Member's comments and concerns of how we can better coordinate the delivery of the budget process being more informed, in that I’d be happy to sit down with Members and see how we can improve on the delivery of this information. Thank you.

Thank you, Mr. Minister. Ms. Lee.

Thank you, Mr. Chairman. On that, the amount for the chargeback to TSC and systems and communications, am I to understand that TSC…I mean, it’s a little confusing here because TSC is within the mandate of this FMBS, but is that the money allocated for this section is charged for the services they use from TSC even though they are TSC? Oh, no, this is the money that directorate would spend to get the services from TSC. Then I would have to ask why it is that this directorate needs to spend that much money on TSC. What is the major work that they need from TSC? Thank you.

Thank you, Ms. Lee. Mr. Minister.

Thank you, Mr. Chairman. This amount shown under directorate accounts for the other sections within FMBS and it breaks down to $266,000 for the system and communications chargeback and then the TSC chargeback, and every department has to pay into this. So although it’s a central agency function, every department pays its portion of receiving the service and our amount works out, for 2004-2005, to $420,000. That breaks down to how much equipment we use or have in use and service provided, as well. Thank you.

Thank you, Mr. Minister. Ms. Lee.

I have no further questions on that item. Thank you.

Thank you. Mr. Ramsay.

Thank you, Mr. Chairman. I agree wholeheartedly with Ms. Lee and her line of questioning on this. Having been my first time through this budget process, we didn’t have the benefit of going through the business planning cycle before we went through the draft mains; but, as a new Member, it’s very confusing. I found a lot of unanswered questions. The term “other expenses” is fairly open to interpretation.

Two of the things I’d like to see come out of this exercise and maybe budgets in the future, I’d like to see -- and I spoke of this in the House yesterday -- the travel budget broken out by department so when there’s a government-wide 25 percent reduction in travel we can actually see that that 25 percent reduction has been met. When travel is not budgeted, I have some difficulty with that.

I also have difficulty with trying to put a number on contracted services. I know that each department does have a number of contracted services. Members were provided with a blue book that accounts for a tremendous amount of government spending on contracted services. I’d like to see some more detail, I guess is what I’d really like to see. That’s a question I’d have for the Minister. What is the process that we can see some of these changes take effect for next year so that when we’re going through this process we can see what some of these other expenses are? The way it’s laid out right now it’s very confusing.

Thank you, Mr. Ramsay. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, as we go through this exercise and go through what would be the normal process, departments begin their budget process in June preparing for the business plan presentation to committees in September. At that time there will be much more detail involved. There will be a lot of information provided that normally doesn’t show up in the main estimates document. We can definitely include more information in the business plan process. It is a lot of information. There would be a lot more paper and to what detail do we want to get down to. I’m committed, as we go through the next cycle, especially the business plan cycle, I’m sure the Member will see much more detail as we go through that process. Then from those business plans, the first year of those business plans are drafted into the draft main estimates and we end up at this process. The Members will have much more information available to them during that business plan cycle. Thank you.

Thank you, Mr. Minister. Mr. Ramsay.

Thank you, Mr. Chairman. I guess another question I’d have is how are travel budgets arrived at in your department and in other departments? In the formula that I found consistent through the various departments was you take the number of employees and multiply it by $10,000 and then you arrive at a travel budget. Is that the case? Maybe the Minister can let me know how it is they arrive at a budget because I don’t think there is a budget. That’s what I’m getting at, Mr. Chairman.

Thank you, Mr. Ramsay. Mr. Minister.

Mr. Chairman, I did sign off letters yesterday evening in response to the Member’s questions in the House about the travel budget and what it amounted to. Within the FMBS it’s not a percentage per employee. The different sections within FMBS go through a process of planning what trips they would be required to be on and billed on that basis. There is a process used for coming up with estimates and requirements the department would have for travel. Again, that information should be in the hands of Members, if not today then very soon. I did sign off the letters showing the 25 percent reduction that resulted. Thank you.

Thank you, Mr. Minister. Mr. Ramsay.

Thank you, Mr. Chairman. Yes, Mr. Minister, I am in receipt of that letter and the accompanying information that was with it. The question that I have though, in the information that you provided it just goes based on actual expenditures and not an actual budgeted amount. I know travel a lot of times is a difficult thing to gauge. Your needs might change over the course of the year and people might need to travel when they weren’t supposed to. I’m just wondering, what I was looking for was budgeted amounts, not actual expenditures. Working off of budgeted amounts it’s a lot easier to see the 25 percent reduction. I’ll ask another question after the Minister answers that. Thank you, Mr. Chairman.