Debates of March 24, 2004 (day 7)

Supplementary, Mr. Braden.

Supplementary To Question 71-15(3): Surface Cleanup At Giant Mine Site

Thank you, Mr. Speaker. I would like to explore this issue of jurisdiction a bit more. There was of course at some point a transfer from federal to territorial jurisdiction for environmental responsibility. Is there difficulty at that sort of large high policy level, or are we simply in dispute about a single site, a single issue cleanup? What is this jurisdictional problem, Mr. Speaker? Thank you.

Minister of Resources, Wildlife and Economic Development, Mr. Bell.

Further Return To Question 71-15(3): Surface Cleanup At Giant Mine Site

Thank you, Mr. Speaker. I will have to get more information and more detail for the Member as to the nature of the concerns and the specific hang-ups between our two governments. I do understand that with the transfer we acknowledge some responsibility for surface cleanup, but not the degree and the level to which we believe the federal government is trying to imply we have. So the dispute surrounds that. As far as specific information on the detail, I think we can discuss that further, but I will get more information.

Supplementary, Mr. Braden.

Supplementary To Question 71-15(3): Surface Cleanup At Giant Mine Site

Thank you, Mr. Speaker. Mr. Speaker, the Miramar Mining Corporation, I think in a deal that worked I believe to their benefit as well to workers, continues to mine ore at the Giant property. It is milled at the Con property. I am wondering if the Minister could advise if Miramar is still planning on following their mine shutdown program and will they be stopping for good the mining of ore at the Giant property later this year? Thank you.

Minister of Resources, Wildlife and Economic Development, Mr. Bell.

Further Return To Question 71-15(3): Surface Cleanup At Giant Mine Site

Thank you, Mr. Speaker. We know that underground operations have ceased at Con, the mill is still operating, and as the Member has indicated ore is being processed there from Giant. Our indications were that that would cease at the end of ‘04, approximately. I don’t think that we have any information to make us believe that plans have changed. I did notice that gold was over $400 U.S. the other day, and I am sure that these kinds of things factor into decisions, but I don’t believe we have any official communication from the company telling us that their plans have changed. Thank you.

Final supplementary, Mr. Braden.

Supplementary To Question 71-15(3): Surface Cleanup At Giant Mine Site

Thank you, Mr. Speaker. One of the major, perhaps the major outstanding issue of the Giant property, Mr. Speaker, is the question of how we are going to be managing the underground vaults that are full of arsenic trioxide. The federal government has indicated that it wants to proceed with an underground freezing option, and I would like to ask the Minister from the GNWT side has this government considered that option and is it prepared to give it its full endorsement? Thank you.

Minister of RWED, Mr. Bell.

Further Return To Question 71-15(3): Surface Cleanup At Giant Mine Site

Thank you. After the issue has been studied for quite some time, and quite a bit of comprehensive discussion around this issue, we believe that given current technology, the in situ option that involves freezing is the safest and best, and most advantageous for us. So at this point we are supportive of that, but we don’t believe that this is a walk away solution, and we are hopeful that future technology will allow…We are hopeful that at some point the material, the arsenic could be rendered inert or there would be some safe way to get it out of there and move it. At this point we believe that freezing is the safest option, so we are supporting it on that basis. Thank you.

Thank you, Mr. Speaker. Mr. Speaker, my questions today are for the Minister of Finance. During the course of discussion and debate about our budget over the last few days, and the days that will be ahead I am sure, we keep talking about the sustainability of our programs and services given our sources of revenue and our transfer from Canada. Mr. Speaker, if the Minister could be so succinct, what is it exactly that he sees at the end of the tunnel here? Where is the light at the end of the tunnel for us? We have been grinding on Ottawa now for so long for a better deal, I am starting to lose faith in that concept. Is the answer ultimately resource revenue sharing, that being the new deal? If so, realistically how far away is it? Thank you.

Minister of Finance, Mr. Roland.

Return To Question 72-15(3): Formula Financing And Revenue Sharing

Thank you, Mr. Speaker. Mr. Speaker, the sustainability we have moved forward is something we have to deal with as a government, and have to deal with it within our existing envelope. There are ongoing discussions and will be ongoing discussions with the federal government around the adequacies of our formula tax effort, re-establishing our base. There are also discussions about royalty revenue sharing. That is an important picture, it is an important item, but right now as our strategy is laid out that is outside of what we can count on for funds in the Northwest Territories. We see it as definitely an asset.

If we can get a fair royal revenue sharing deal with Ottawa, then we can start dealing with our own issues and enhance our programs. Right now, operating with what we have as a budget, we don’t have enough, and the numbers that are laid out now are built into our budget, built in for years forward, and we still don’t have enough, we are still going to have some deficits going forward. So we have to deal with our structural problem. That is why our reduction scenarios are there for the future years of $20 million and $20 million, and our increased revenues. As we set out our fiscal strategy when we first got together in December we needed, just to get to our position of a $50 million deficit, we were counting on $10 million of our own source revenues, $10 million in reductions, and $30 million from the federal government. Through the process, the federal government hasn’t put $30 million into the basket. So we were planning on coming back with a negative supp to just maintain what we put forward as a plan, another $10 million negative. With what has happened now in the formula, this $50 million break that we have means that we won’t have to come back with a negative supp, we will have a balanced budget, but our ongoing structural problem remains. We still are spending more money than we have in revenues, and right now, as I stated in my budget address, if we could see revenue flowing by 2007 that would be very optimistic. Thank you.

Supplementary, Mrs. Groenewegen.

Supplementary To Question 72-15(3): Formula Financing And Revenue Sharing

Thank you, Mr. Speaker. So, Mr. Speaker, when we talk about resource royalties comprising a part of our revenues, is the Minister saying that when we get those that those are going to be on top of what we already get from Ottawa, or isn’t that just going to diminish what we get in the form of other revenue from the federal transfer? Thank you.

Minister of Finance, Mr. Roland.

Further Return To Question 72-15(3): Formula Financing And Revenue Sharing

Thank you, Mr. Speaker. Mr. Speaker, the Member is correct in a sense of how those royalty revenues would impact on transfers. The federal government would use that as an opportunity to drop the transfer payments, but at the same time, what we are trying to negotiate is a better deal where we would get to keep a larger portion before the federal government takes back from our transfers. So an actual incentive. Right now there is very little incentive to do any development in the Northwest Territories for, number one, any new revenues we get, we get a drop in transfer payments. That already exists today. So if we get more corporate taxes and so on we are going to drop down on our transfers. That happens today.

On the royalty revenue side, if we can negotiate a more positive deal we get to keep more of that. Today, existing in the formula, for every dollar we raise in additional revenue from the Northwest Territories we get to keep 20 cents of that dollar, 80 cents goes back to Ottawa. That is the way we lose it in the transfer. So we are hoping to increase that incentive, instead of 20 cents more where we can really start beginning to see a net revenue and result coming to the Northwest Territories where then we can really enhance the programs that we have. Right now the way it is there is no real incentive for us as a government to see big development because we get to deal with the impacts of development, we don’t have the payback after development happens and companies start making profits, and we don’t get to see the royalty revenues side of it. So that is the negotiations side, but optimistically we would be lucky to see that by 2007. So we have to, as I have set out in a fiscal strategy, live with what we have and try to operate and fix our structural problems around our debt situations going forward. Thank you.

Supplementary, Mrs. Groenewegen.

Supplementary To Question 72-15(3): Formula Financing And Revenue Sharing

Thank you, Mr. Speaker. I would like to thank the Minister for that explanation because I believe there is a perception out there in the public in the Northwest Territories that there is, not quite the way the Minister describes it, but there is some utopia coming here to our fiscal situation as a result of these negotiations taking place on resource royalties. One of the questions that was posed to me by a constituent was with respect to the tax initiatives the Minister has proposed. They were wondering when we get this deal, and when we start to see the kind of revenue we need to sustain ourselves here in the Northwest Territories, would the Minister consider including in the legislation a sunset on those kinds of revenue raising initiatives. So that is why I am trying to put this question into context so that people can understand that it is not going to be a magic one-time bullet, it is a transitional ongoing negotiated thing. To the question of my constituent, is it possible that on some of the either reductions or revenue raising initiatives such as additional personal income tax, is it possible to build some kind of a sunset in those, just like what the Conservatives did with the GST that we are still waiting for? Thank you.

Minister of Finance, Mr. Roland.

Further Return To Question 72-15(3): Formula Financing And Revenue Sharing

Thank you, Mr. Speaker. Mr. Speaker, part of what we are putting forward in this strategy that we have and balancing our budget is increasing our own revenues, taking into the scenario that there is going to be a growth and demand of services. As we argue right now, we are not able to keep up with what we have, we are not able to keep up with the level of capital infrastructure that we should be putting into our communities and replacing existing facilities. We are not able to keep up with that because of our fiscal situation. So we have a long way to go before we can look at sunsetting some of our programs or our tax initiatives. What we put forward, again, based on what we discussed as all new Members when we got here, was $10 million of our own source revenues, $10 million reductions and $30 million from the federal government. We haven’t gotten that $30 million from the federal government. What we did was get a one-year break in trying to work out our tax effort. So we still have a problem that is going to hit us in 2005-06 with our expenditure side of the picture versus our revenue side. So we still have to fix that. Future governments, if things get so good that we become a have-territory, then future governments can as they have in the past reduce some of the tax effort that we have to put in place right now. Thank you.

Final supplementary, Mrs. Groenewegen.

Supplementary To Question 72-15(3): Formula Financing And Revenue Sharing

Thank you, Mr. Speaker. Mr. Speaker, the tax initiatives that were referred to in the budget address by the Minister have sort of grabbed the attention of the public here, and that is why we are getting questioned about it and it will be necessary to talk to people about this. So thank you for that explanation and I think that definitely does put it in context that this is probably not a short-term thing. I think it will generate a lot of response from the public and I am hoping that the Minister will make himself or his officials available when we return to our constituencies to get out and about and talk to people about these fiscal realities because it is difficult to understand. Does he have a plan or program to consult, communicate even after the fact on some of these revenue raising initiatives that he is proposing? Thank you.

Minister of Finance, Mr. Roland.

Further Return To Question 72-15(3): Formula Financing And Revenue Sharing

Thank you, Mr. Speaker. Mr. Speaker, I would be glad to arrange with Members of this House meetings and trips into their communities to try to lay out what we have put in place, to explain the reasons why. There is a lot happening in this area and we need to get that across to Members and their constituents. When we took office and I took on this responsibility, it wasn’t my intention and a target that I would automatically go after taxes of our own people in the Northwest Territories.

The unfortunate reality is we have to come up with some new revenue to maintain the existing level of programs and services. We have already heard from Members in this House of the need to try to continue some of the programs that are being sunsetted, that were already planned to be sunsetted. When we come forward with reduction scenarios in the future years there is going to be a request to have some more of these programs in place, and we are just unable to do that at this time. We have to come up with our program to match our situation. So that is why it has come forward. I will gladly arrange to go into communities with Members to try to explain through our process. Thank you.

Thank you, Mr. Speaker. Mr. Speaker, my questions today are for the Minister of Finance as well. They are to do with my Member’s statement in regard to the federal budget. Mr. Speaker, I would like to ask the federal Minister, I don’t know if he heard our MP, Ethel Blondin-Andrew, on the radio this morning really bragging up how good this federal budget was for the North. When she mentions territorial formula financing for $150 million, it’s health support, $60 million; economic development, $90 million; northern oil and gas, $75 million; contaminated sites, $3.5 billion. How much of that money can we really expect to see in the Northwest Territories? Thank you, Mr. Speaker.

Minister of Finance, Mr. Roland.

Return To Question 73-15(3): Benefits Of The Federal Budget

Thank you, Mr. Speaker. Mr. Speaker, on the territorial formula financing side, of the amount that was identified, the Northwest Territories over the five-year period would see approximately $74 million. That, Mr. Speaker, is already built into our budget estimates and forecasting, and we are still falling short. For example, the other one of $90 million over five years, split, if you use the existing formulas that have been in place, we might see $6 million a year coming North, not through the GNWT but through DIAND as we expect it will flow, and we are waiting to see the initiatives, the criteria that will be attached to that. The health funding that was identified as part of the formula, in fact as I stated, is part of the formula. The agreement that was agreed to with the Prime Minister and the three Premiers of the territories, on the $20 million split between the three territories, there is a commitment to extend that beyond 2006-07. So the $60 million is in there over three years, again split by each territory. So ongoing beyond 2006-07 we might be netting in the area of approximately $8 million. So the numbers do break down differently as we see it and we’d have to get more details to see the final numbers and how they fall out. Thank you.

Supplementary, Mr. Delorey.

Supplementary To Question 73-15(3): Benefits Of The Federal Budget

Thank you, Mr. Speaker. Mr. Speaker, I suspect then that the way our MP laid out the figures this morning, she is probably stealing a couple of other MPs' thunder because when she speaks of northern Canada, or when the federal government talks about monies coming to northern Canada, what area are they talking about? Is the Finance Minister aware of what area they talk about? Is it just the three territories, is it northern BC, northern Ontario, northern Quebec, how big is northern Canada? Thank you, Mr. Speaker.

---Applause

Minister of Finance, Mr. Roland.

Further Return To Question 73-15(3): Benefits Of The Federal Budget

Thank you, Mr. Speaker. I know when I go south I think northern Canada is our territory, but as well we know when we meet with our federal colleagues they have northern jurisdictions as well. So it is difficult to pinpoint that, and as I said, we will have to wait to see what criteria is attached in those dollars and how they roll out in the North. Thank you.

Supplementary, Mr. Delorey.

Supplementary To Question 73-15(3): Benefits Of The Federal Budget

Thank you, Mr. Speaker. There is one thing we are getting good at and that is to wait and see. We have played that game before and I guess we will continue to do it for some time now. Mr. Speaker, in the budget it was addressed. If there was a positive one, it was the $50 million to deal with our tax effort. How long will it be, Mr. Speaker, before we know how the federal government is going to treat that, whether it is going to be just a one-time thing, whether they are going to adjust the thing on an ongoing basis? When could we expect to find out how the federal government is going to go on that? Thank you, Mr. Speaker.

Minister of Finance, Mr. Roland.

Further Return To Question 73-15(3): Benefits Of The Federal Budget

Thank you, Mr. Speaker. Mr. Speaker, in the correspondence I received from the federal Finance Minister, Minister Goodale, he states it is a one-year break. The rebasing exercise will not happen for 2004-05, and there is direction that we have our people get together and work out the tax effort portion of what we would say is rebasing. We will have that in place by 2005-06. So it is a one-year break and that is why we have the $50 million for this year that would have been taken out, and we’d already built our budgets around that money being taken out. So he has given us one year to get an agreement in place with them around the tax effort and rebasing. Thank you.

Final supplementary, Mr. Delorey.

Supplementary To Question 73-15(3): Benefits Of The Federal Budget

Thank you, Mr. Speaker. Mr. Speaker, on that line, when we say we are going to review our tax effort, they are giving us one year off and giving us time to review it or they are willing to look at it. If they decide to readjust that what can we expect? Would it be $50 million a year if they decided to do away with the tax effort and if it did, what are the possibilities that these new revenues could maybe replace some of the reductions that the Minister has talked about for the next following two years, the $20 million each year for the next two years? Could that affect those reductions? Thank you, Mr. Speaker.

Minister of Finance, Mr. Roland.

Further Return To Question 73-15(3): Benefits Of The Federal Budget

Thank you, Mr. Speaker. Mr. Speaker, without knowing if we are getting close to an agreement stage, I couldn’t tell you if we would benefit $1 million more, or $50 million more. We just know that the existing exercise is costing us $50 million a year ongoing if it doesn’t get fixed. We feel we have a good example that it is not working properly, and feel that the federal Department of Finance has recognized that. That is why he has agreed to forego the rebasing exercise for 2004-05. If I stood here today and said if it is $20 million, let’s match that in reductions. If it doesn’t happen I would have given you the wrong information. We are too early in that stage. Right now as things are going on, it depends on what year they measure our tax effort on. It could impact those negotiations, so that is one of the reasons why on our side of safeguarding our revenue base through one of the initiatives I put forward in the budget address. So I couldn’t give the Member an accurate figure going forward. All I know is I have one year to come up with a new tax effort situation. They will not get rid of tax effort, it is a matter of how it works out in the system, and what numbers will be used, and how they will be weighted. Thank you.

Thank you, Mr. Speaker. With regard to my Member’s statement, I would like to ask the Minister responsible for the Business Credit Corporation a question for the benefit of my constituents who received legal notices that their loans have been called. What steps are followed after being given these notices that the BCC is calling in their loans? I am interested in the process that is followed after being legally contacted. Thank you.

Minister of RWED, Mr. Bell.

Return To Question 74-15(3): Business Credit Corporation Loans Arrears

Thank you, Mr. Speaker. I will have to get the Member more specific detail as to the steps that follow our contact with a client, and notification that we are pursuing legal means. I would say legal means are a last resort, we are not trying to be overly litigious. We work very closely with clients to try to help them through rough spots. I know the BCC makes every effort to look at temporarily allowing interest-free payments and withholding the requirement that interest be paid. There are even times when a stop payment is made on principal if businesses are in a truly difficult position. So we try to work with the clients and recognize the difficulty that they're in before we move to legal means. Thank you.

Supplementary, Mr. Menicoche.

Supplementary To Question 74-15(3): Business Credit Corporation Loans Arrears

Thank you, Mr. Speaker. Just for clarification from the Minister, is it necessary that some of the arrangements were so that the term loans become flexible of waiving interest and deferring principal payments? When it's noticed that the business is in trouble, do they try to then look at these different alternatives for the BCC, as opposed to these letters from the lawyers to call in their loans? Thank you.