Mr. Chairman, the project was pegged at $165 million and there is and has been provision because of the $15 million cost overrun, as per our concession agreement, required that that money be recovered through the tolls. That’s what we’re obligated to do.
I’m doubtful but always hopeful, of course, that the Transportation Minister probably can answer this question. It’s regarding Minister Flaherty’s position and, as I have stressed to the Premier who is acting in the capacity of Finance Minister today, my concern on the weight of the position that Finance Minister Flaherty has assured us that this will be coming for special dispensation to be able to carry this type of number on our books. The issue for me is, I guess, satisfying the concern that this will actually be fulfilled. I’m trying to say it in such a way as when does the Premier expect, if he has an expectation date, that we will get special dispensation from the Minister of Finance that our government can add the $165 million debt to our books without it affecting our debt wall?
As time is ticking away I’m just going to add one footnote to that point. When I am in the community, and I certainly don’t shy away from questions whether they are constituents or not, but in the community one of the fundamental bottom lines really coming from people is the fact of will carrying the extra debt on our debt load affect things like schools or health care programs, et cetera? Hearing from the Transportation Minister that our payments or bottom lines are relatively stable if not the same and if not looking better due to the changes that may occur in this process, the one outstanding factor is this dispensation from the federal government to allow us to carry this on without affecting our books.
That’s to explain why I want to be clear and be very sure that is coming. I suspect it’s equally shared in some manner or not with the other Members.
Mr. Roland.
Thank you, Mr. Chairman. I guess the first part of that is the weight I would place in the call that I had and the following actions from that call. February 27th I believe was the date. I had a call with Minister Flaherty discussing with him the fiscal situation we could find ourselves in as the Government of the Northwest Territories when it comes to the debt situation and the Deh Cho Bridge Project and the call of the lenders to assume that debt. At that point he said he would work with us to deal with that debt.
Following that, we have had discussion between Finance Canada staff and our staff here and we’ve put forward a proposal. We know that they are working on language for Minister Flaherty to bring forward and I’m hoping within a matter, and it’s difficult on this to say, that within a couple of weeks he may be able to address that or get back to us on what the specifics are on that. But he said they would be looking to deal with this in a very timely manner, recognizing this was a couple of days before he was about to address the nation on his budget process. So we realize that they’ve been very busy there, but in that business they have contacted us. We have exchanged a proposal and we know that they are working on wording to go forward that would protect us.
Now, saying that, we could pass this bill today and that won’t affect our debt wall. We won’t go over our debt wall. If we did not get relief, our debt wall would be impacted in 2011-2012, the latter part of the last year of our term. So we’ve got a window to work with and I’m counting on, again, the commitment from Minister Flaherty that he would deal with this in as timely a manner as he can bring it forward on.
Okay. I have a long list. I have Dave, Norman, Wendy, Tom, Glen and Bob, in that order. So, Mr. Ramsay, you’re next.
Thank you, Mr. Chairman. I guess I take some comfort in the fact that the Premier is talking to the federal Finance Minister. I know the Premier mentioned the fact that I’m a card-carrying Conservative, which is true. Although it’s unusual to bring up party preferences here in this House, the last time I heard that was from our current Finance Minister who had his ABC -- Anybody But Conservative -- campaign going in the run-up to the last federal election. I wonder how that is helping us with our negotiations with the federal government and any other concerns financially that we bring to the federal government. I just wanted to put that out there.
I want to get back to some of these deficiencies that the Minister of Transportation has brought to our attention today. I disagree with him. I think he referred to the scour rock issue as minor. I’m not sure how much money was spent on dumping that scour rock into the Mackenzie River, but to surround four piers in that river was a tremendous amount of rock. To my knowledge that scour rock was prepaid. I know that the Minister had mentioned that it hadn’t been paid for yet, but to my knowledge it was prepaid. We’ve paid for that rock that’s at the bottom of the Mackenzie River. Most of it is probably half way to Norman Wells by now and we had better ensure that those piers are protected. I want to ask the Minister what assurances we have that that rock is going to be replaced around those piers so they are fully protected.
Minister of Transportation.
Thank you, Mr. Chairman. We agree that those piers have to be protected. There is some concern being raised that there was a deficiency on some of the scour rock that was provided for the south side. On the north side all the scour rock was appropriate size and of the quality we were looking for. On the south side there was rock that was placed into the water for protection that didn’t meet the standards and we are analyzing that right now. I would point out, though, that a lot of the provision of the rock was stopped right at the pit because it was recognized that it was the wrong dimensions. We’ll analyze the situation. That is going to be done this year. We are also holding back dollars for work that was performed on the south side. So if it doesn’t meet the standards, the deficiency will not be signed off and it will have to be provided for with the dollars that are being held back.
I think perhaps we’re getting somewhere. I hope people are getting an understanding of why it is that I am hesitant to support this $165 million. I mean, this rock didn’t meet the standards but somebody decided to dump it into the river anyway. What other issues are out there that didn’t meet the standard that are going to come back and get us or have the potential to come back and get us? Obviously if this rock didn’t meet the standards, somebody’s got to be responsible for dumping it off that temporary bridge into the Mackenzie River where most of it was, like I said, of a diameter where it’s probably floated down the river. Somebody approved that. I’d like to know who that was and what recourse we have.
Like I said, I don’t think the Minister responded to this either, that scour rock on the south side was prepaid. I’m not sure how we’re going to go about figuring that out. That rock was prepaid. It was limestone. It wasn’t granite, it was limestone. I’m not an engineer. I took a geology course in university. Limestone erodes very quickly and it doesn’t have the properties that granite has, which, as the Minister said, was used on the north side. The north side piers are protected with granite. So what are we going to do about the south side piers and the limestone that was put in there?
The scour rock that was used on the south side was not approved. So let’s be clear on that. Whether it floated down to, where did you say? Norman Wells? We’re not sure on that. We’re doing an assessment of what has remained. We don’t expect that rock would have to be replaced, but we would have to provide additional armour rock to make sure that the piers are protected properly. We are going to be doing an assessment. That deficiency has not been signed off. It has not been approved.
If the Minister knows that the scour rock used on the south side didn’t meet standards, again, I’m having trouble understanding if the quality assurances and quality controls are in place on that project how that rock could end up at the bottom of the river. That’s a pretty fundamental question for me. Does the Minister have pictures of that scour rock that was used? Has he seen pictures of that scour rock? Has the department seen pictures of the scour rock? I do have a number of pictures that I’ll table in the House and that I will share with the Minister. I wanted to make that abundantly clear. I know these guys are calling me out a little bit on the information that I have. I just got those pictures Sunday night. We were back here yesterday and I mentioned it to the Minister yesterday in the meetings we had. I’ve been up front and I will continue to be up front. Obviously I don’t take throwing around accusations like workmanship and deficiencies in that project very lightly. I want to know what I’m talking about. I’m not just going to come in here and shoot my mouth off. I’d have to have every assurance from the person that I’ve been talking to that they know what they’re talking about. And I do. I do have a lot of assurance that this individual is credible and what he is saying has a lot of merit. I will share those pictures with you. I’ve told my colleagues here on this side of the House, I told them this morning at P and P, if anybody wants to see the pictures they’re more than welcome to see them. Like I said, I’ll table them in the House so that everybody can see these pictures. They speak to a few issues. One of those issues is that scour rock. I asked the Minister, he said he had some pictures, let’s compare pictures. Does he have pictures of that scour rock that was used on the south side piers?
Mr. Roland.
Thank you, Mr. Chairman. Again, as I had stated earlier, there’s a very fundamental question here about what’s being said here in the public forum. Even in committee, if Members, if any Member has information, credible information of deficiencies by people who are ready to put their status on the line, then do that. Let’s deal with the issue. But to continue to wave a flag about and make these comments is very dangerous to the professional credibility of all people.
We have a new project team, Associated Engineering, who is going to take over this and do the audit and provide that information. The Minister has committed to working with committee going forward on that basis. The Member said let’s compare pictures. Well, let’s go beyond just comparing pictures because, I mean, I could sit here and you could show me a picture of a rock. I couldn’t tell you if that was a rock that was, how big, the size, compared, is there a quarter beside it, is it the size of a football or what? The structure of that rock? I couldn’t tell you that. So putting a picture on the table and saying this is what it is, is one thing. The Member himself said in this forum he’s not an expert in the area. So let’s get the experts and let’s get them to verify the information on both sides.
As we have a new project team who will take this on I’m sure they’re not going to take on faulty workmanship and have them sign their names and status on the line to a project that is going to be hauling people across the river. Thank you, Mr. Chairman. We can go to Minister Michael McLeod.
Minister of Transportation.
Thank you, Mr. Chairman. The Member, I think, is assuming that we’re not aware of the deficiencies. We’re completely aware of the deficiencies. We’ve probably got the same pictures. If he wants to compare pictures, that will be fine. We have a list of deficiencies. It gets pretty detailed, right from hole size to length of the bolt that’s sticking out. Scour rock was part of it. We are aware of the deficiencies; we’re dealing with the deficiencies; many of them have been dealt with already. If I’m going to be sitting here answering why every one of the deficiencies has been in place, that’s challenging, but we certainly can share that information as we go forward. We are doing a complete analysis of what has been out there as deficiencies and what has not been signed off. All the companies involved are meeting today and have been meeting all day to talk about any issues that are out there. If the Member wants to bring that forward to them or to us so we can provide it, we’ll certainly follow it up with more in-depth analysis so that all the Members and the people in the Northwest Territories can be reassured that this is a safe project.
Next on the list I have Mr. Yakeleya.
Thank you, Mr. Chair. I want to ask about the toll fees and when the Minister will have some type of solid information in terms of the new information that we’re going to get for the toll fees in light of what some things that may happen in terms of revenue coming in for the payment of the bridge.
Minister of Transportation.
Mr. Chairman, right now we’re looking at servicing some of the cost from this project through revenues generated from tolls. We expect for the first year it’s going to be around $8 million that we would have to use to service the debt and half of that we would expect to raise from tolls. The other portion would be from money that we’re already spending on the ferry service and the ice bridges, and also there’s a contribution from our government on an annual basis.
The other question I have is in regard to the issue around Minister Flaherty and the Minister of Finance in terms of a working relation arrangement. I think what I heard from the Premier, Mr. Chair, in terms of that coming close to some satisfaction, in terms of yes, this will not hinder us in terms of our fiscal forecast, forecasting projects that we have in the future, and that I’m leaning towards the Premier’s voice in terms of the evidence that the Minister is going to do something, the federal Minister. He said something like that. I just need to know if the Premier would, even if it’s some type of indication on paper to show that this is what the federal Minister is going to help us with the situation here.
Mr. Premier.
Thank you, Mr. Chairman. Mr. Chairman, number one, the federal Finance Minister, as I worked in the previous Assembly as the Finance Minister in the first year of this government and developed a working relationship with Minister Flaherty, has been very straightforward in the sense of where he’s at when he says that he will work on certain issues with us, he has always delivered. When he says no, we’re unable to do that, he says it right up front and is clear with that. So following that discussion I had with him, the further commitment that I have seen that is evidence of that commitment is the fact that his staff and our staff have been in discussions regarding the proposal. I have requested of his office to get some confirmation in writing so that I could share with Members as well. Thank you.
Thank you, Mr. Premier. I look forward to that discussion with the Members after he’s had some discussions with the Minister of Finance Canada.
Mr. Chair, in terms of the time frame to complete the bridge, we’re looking at 2011, in terms of this time frame and the amount of work that it is required, we aren’t too sure how things are going to unfold next week or the day after. We’re under a time frame. There are certain consequences of not meeting the time frame. In his good judgement and estimation, can the Minister of Transportation say that the quality assurance of the project, things that we’re going to be looking at a little closer in terms of the structure, that we’ll be able to meet this time frame in light of what Mr. Ramsay has been saying, in terms of those issues? I just came to know about them and I’m not too sure if that’s true or not. The Minister has talked about some deficiencies. Is that something that we can safely say by 2011 that this bridge will be done and finished and that you’ll have the satisfaction? Because you are right, lives are going to be depending on it, they’re going to be crossing it. It’s very serious about this issue here. I have children or relatives, the same as anybody around here, so we really have to be serious about this. So when you say time frame, I really want to make sure that we are able to meet this time frame, because there are consequences for not meeting this time frame, there are penalties, and I want to make sure that we are prepared with some alternative plans depending on how we go about this. I want to have a few minutes from the Minister to see if he could help me with this question here.
Minister of Transportation.
Thank you, Mr. Chairman. I should point out that the issue of deficiencies is part of any project that we have on our books. All projects encounter challenges, be it big or small, there are a lot of things that are always being flagged and this project is no different. Every item that, no matter how small, if it doesn’t meet the code, if it’s not done properly, then it’s flagged and it’s either left until it’s rectified or else a solution is found to fix it. And that list changes. Some things get resolved. As the project moves forward, new issues are added to it. That will continue right until the project is completed, and even after traffic is moving on it I’m sure there will be smaller things coming forward that have to be looked at.
The time frame is something that we’ve had a lot of discussion on with the people that are going to do the actual construction. They point to November 2011. We agree that’s a date that we’d like to see traffic crossing. We have all the steel ordered. We have a new contractor that’s already on site. We have new project management that is going through a transition, and we expect to start to see some of the steel coming on to the bridge site by this summer. So we are already working quite hard to see that this project meets the deadline, I mean the time frame in place and that’s something we don’t want to see any slippage on. Thank you.
Maybe I’ll just remind the House to keep the side chatter to a minimum. It’s affecting some of the responses here. Mr. Yakeleya.
Thank you, Mr. Chair. Mr. Chair, my last question in this round here would be the issue of project management and quality assurance in terms of going forward. I reviewed what the Ministers have put before us and it seems like we really have taken the bull by the horn on this project here with the GNWT in terms of how you set up the org chart and you told us how certain qualified people are going to manage this program, get the bridge built, in terms of that quality management project team initiative.
The one thing I wanted to look at, besides that, is how the community of Fort Providence is going to be involved. Mr. Minister has talked about the involvement of Fort Providence in terms of the Metis and the Dene First Nation on their involvement and partnership arrangements. They have released a press release and they have stated publicly their position and I look forward to seeing what type of arrangements will be made.
I just want to ask the Minister about going forward if he has some draft indication as to when an agreement could be reached with the community of Fort Providence in terms of a partnership agreement. Is that going to be something that’s going to hinder us or is that something that’s going to be just one of the other tasks that needs to be completed in terms of the completion of this bridge? Thank you, Mr. Chair.
I think right now one of the most concerning issues was to try to get the project stabilized in terms of having a new contractor in place and having all the material ordered and people on site and dealing with the transition. That is taking place right now. The construction, we feel, is now coordinated and it’s going to move forward and we don’t expect that will be affected.
There is a lot of work that’s been done in choosing project management and the new companies that are on the site. We certainly have done due diligence and looked at the background and checked out references and looked at their experience and they have provided us a lot of information and certainly feel free to provide that to the Members if there is a desire to see that.
The community involvement is something that’s, again, ongoing. We’ve, I think, all staked out our positions now and it’s a matter of sitting down and concluding the discussions. The community has expressed a desire to stay involved. They would like to see a lot of the benefits in terms of contracts and things of that nature provided to the residents there. We expect that in maybe two weeks we should have things concluded and be able to share that information to the Members. I don’t know if there was another question there, but that’s good for now. Thank you.
Next I have Ms. Bisaro.
Thank you, Mr. Chair. My first question I’d like to go back to a comment I made in my opening comments in regard to the revenue and expenditures for this project and in listening to the conversation I’ve been able to glean some figures, which are more up to date than the 2008 figures that we were given earlier. My question is I would like to see a list of revenues and expenditures based on 2010 numbers as opposed to based on 2008 numbers and I’ve managed to gather that our revenue is going to be approximately $4 million from tolls, give or take, $3 million from the operations of the ice road and the ferry and about $2.3 million for the subsidy, which the GNWT has guaranteed, I gathered. But in terms of the expenditures I’m still somewhat, I am in the dark, I’m not somewhat in the dark. I’m told the debt payment is going to be about $7.9 million. I’ve asked the question before and I’ll ask it again: is that debt payment going to be the same every year for 35 years or does that payment schedule change and can we see what that payment schedule is?
The O and M costs, the only figure that I’ve heard is about $700,000, but that’s 2008 and I suspect there’s been some change to expected O and M costs. O and M costs will also be minimal in the first few years and will increase over the years as the bridge gets older. So what is the expectation of the department in terms of how quickly those O and M costs will increase and then there’s the equity payment to the Deh Cho Bridge Corporation or whatever entity they become. That, I realize, is up in the air because negotiations are still underway, but I have no real handle on what the expenses are going to be. I’m getting a sense of what the revenues are going to be and I would really like to know if the Minister can either provide that information now or if we can get it certainly before we have to vote on this bill. Thank you.
Minister of Transportation.
Thank you, Mr. Chairman. The expectation will be that there is going to be a requirement for payment on the debt, which is interest plus principal and there’s also going to be O and M costs and that will roughly be around $8 million indexed on an annual basis. The equity payment to the Bridge Corporation is not something we have resolved yet, so we can’t give a firm number and the reason we don’t have up to date, today’s traffic volumes, is because we don’t have the 2010 information yet and that hasn’t been compiled. So it will be quite difficult to provide the information that the Member is requesting before the vote on this takes place. Thank you.
I still didn’t hear a number for O and M costs, but I’ll just choose to carry on.
I have another question and it was mentioned, I believe, by the Minister earlier in reference to the fact that this is, was, a P3 project. Quite some time ago I believe Members saw a draft of a P3 policy and I was just wondering whether or not that policy is anywhere on our radar going into the future. For any projects of a similar nature, are we going to have a P3 policy which has been approved by this House? Thank you.
Mr. Chairman. I’ll just respond to the Member’s request to see some of the O and M costs. It was anticipated that the costs for the O and M on the Deh Cho Bridge was going to be around $700,000 a year. However, now that the project has been assumed by our government and things have changed in terms of requirements, such as insurance, we expect that is going to be around half of the $700,000. So O and M we are pegging at $350,000 a year. I’ll let the Premier respond to the rest.
Mr. Premier.
Thank you, Mr. Chairman. I’ve been informed that in fact the Minister of Finance did present a draft policy, I believe, to committee and is awaiting a response. Thank you.
Ms. Bisaro.
Thanks, Mr. Chair, and thanks to both Ministers for that and I appreciate the estimate of the O and M costs. If it so happens that sometime down the road that the expenses for the bridge are more than the revenues that we take in, how will that debt be handled by this government? Who is going to cover the excess expenditures in any particular fiscal year? Thank you.
Minister of Transportation.
Thank you, Mr. Chairman. That’s a hypothetical question, but at this point we would expect that we would treat it as if it was a cost overrun and it would be recovered and recouped as traffic volumes went up. Thank you.
Thanks for that. My next question has to do with I believe a stated commitment by at least one or both Ministers to ensure that, I think I heard in remarks earlier today that we will ensure that future governments will not be able to enter into large projects or agreements on large projects towards the end of any Assembly’s term. I just wondered if either the Premier or, I guess the Premier, could advise how he intends to make sure that that doesn’t happen. Thank you.
Mr. Premier.
Thank you, Mr. Chairman. I don’t believe I responded to that particular question. The area of a government’s outgoing days, the Cabinet, its authority, seeing if there’s an emergency of some nature that always has to be taken into consideration, but I would say that because of a project like this and the nature of what’s happened from it, we would have to get a process, a commitment, that outside an absolute emergency that it be business as usual that would go on and I mean that’s payroll, that’s your programs and services in our communities that are ongoing day-to-day initiatives. So you’ve got my commitment at least in this 16th Assembly that I won’t be saddling the next government with a scenario that we’ve been faced with. As for going forward, again that would be the will of the Assembly-of-the-day as to just how they wanted to proceed. Thank you.
Thanks to the Premier for that response. I appreciate his commitment and his pledge not to go to places we’re already in.
My last question has to do with the Deh Cho Bridge Corporation. I know we are undergoing negotiations with them and trying to determine what form that particular corporation is going to take, keep or become. But I wondered two things: do we have a responsibility to the Deh Cho Bridge Corporation shareholders? Does this government feel that we have a responsibility to their shareholders? The other question I had is if the corporation is dissolved, whether or not this government will incur a cost to either the shareholders or somebody if the corporation is dissolved. Thank you.
Minister of Transportation.
Mr. Chairman, that’s something that is yet to be determined. We are having discussions, as I’ve stated. We’ve had some already. We’re going to be meeting on Thursday with some of the people from the Bridge Corporation and look at a way to move forward. They’ve brought some options forward. We are also developing some positions. So it’s a little early to say if there is going to be any cost incurred by us.
One last question, I guess. I understand that we currently have a Deh Cho Bridge Fund and I mentioned in my remarks that I think we ought to keep the project costs for this particular project separate from the costs of sort of regular Department of Transportation costs. I wonder if the Minister of Transportation could advise whether or not that is something he would consider and if he would commit to do that. Thank you.
The act requires us to keep a detailed accounting of all the revenues that arise from this project and all the expenditures, so that’s something we will be obligated to follow. Thank you.
Thank you. Next I have Mr. Beaulieu.
Thank you, Mr. Chairman. Mr. Chairman, I want to go back to the 35-year loan. I am going to have to assume that the rate on the 35-year term must have been a very good rate in order for the government to support the Deh Cho Bridge Corporation from signing a loan that has one huge long term in it. I’ve been told by the deputy that’s maybe industry standard, but if we go back to using a scenario of a mortgage right now, today a two-year mortgage is 2.7 but a five-year mortgage is 5.2 roughly . So, you know, as the term gets longer, the interest rate usually gets larger so that the lender is trying to protect themselves as much as they can if they are going to lock into a long-term loan. Since the GNWT supported a rate of lock-in for this length of time, I have to make the assumption that it was a very, very good rate.
With that, I would like to ask the Minister of Finance, in order to ensure that in future that the future of the Northwest Territories is not mortgaged, that we look at asking the federal government to treat this loan as a self-liquidating loan considering that the expenditures that were already in place are going to be transferred to service this debt. Then there’s going to be also tolls that are going to service this debt and that there will be a smaller portion of money annually put in by the Department of Transportation to service this debt. Therefore, would the Minister consider what is the feeling of the Minister, or the Premier I should say, what is his feeling on what would happen if he was to approach the federal government to say that looking at a permanent debt limit increase of, say, $150 million and start to treat this portion of the debt as a self-liquidating debt? That would ensure there is no impact five years down the road on infrastructure items for, especially like my concern, a small community and so on. That’s all.
