Thank you, Mr. Speaker. I would like to provide an update on the fiscal position of the Government of the Northwest Territories. Since the Legislative Assembly approved the 2007-08 Main Estimates for the GNWT in March of this year, there have been significant changes to the government’s financial picture. The changes are positive and with prudent decision-making will help to establish a solid foundation on which this Legislature can plan future activities.

As Members are aware, appropriate and predictable territorial formula financing, or TFF, arrangements and an increased GNWT borrowing limit have been key goals in this government’s fiscal discussions with Canada. These goals have proven challenging to achieve, but I am pleased to report that we have been successful in resolving both issues.

The federal budget speech delivered on March 19th described a new TFF that will be used to determine the grant provided to the GNWT each year beginning in 2007-08. The new formula will be based in federal legislation that is expected to be approved in June 2007 and will result in predictable and stable fiscal arrangements with Canada.

The new TFF is based largely on the expert reports that were submitted to Canada over the past two years. The GNWT and many northerners were active in contributing to the development of these reports. I am pleased that many of these recommendations have been accepted and will become part of the revised TFF. Highlights of the new TFF include:

separate territorial financing arrangements for each territory;

improved certainty with respect to the calculation of the federal grant through the establishment of a single payment estimate in October prior to the next fiscal year;

use of the previous gross expenditure base escalator that measures population adjusted growth in provincial/local government spending;

an economic development incentive of 30 percent of adjusted own source revenues; and

an adjusted gross expenditure base that includes additional federal funding for fiscal years 2004-2005 and 2005-2006.

The GNWT borrowing limit has also been increased effective April 1 of this year, from $300 million to $500 million. This is a significant step in providing the GNWT with flexibility to make strategic investments in infrastructure to improve the lives of northerners.

Mr. Speaker, I must acknowledge the leadership of the federal Finance Minister in addressing these two priority areas. Mr. Flaherty promised to deliver predictability and stability to our fiscal relationship with Canada and he has done so in a timely and collaborative manner.

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Based on the available information regarding the TFF, we expect that the federal grant for 2007-08 will be just over $788 million. This is an increase of nearly $25 million from that shown in the 2007-08 Main Estimates. Additional increases to the grant of $25 million in 2008-09 and $23 million in 2009-10 are also expected over the amounts in the recently approved main estimates.

The federal budget also included announcements related to changes in the Canada health and social transfers, several program-specific trusts and a one-time payment to the GNWT that is related to an outstanding tax matter. The federal eco-Trust has been effectively linked to our energy plan and Greenhouse Gas Strategy allowing us to expand our efforts in this important area.

The federal budget included an additional $25 million per year for seven years for infrastructure activities in each territorial and provincial jurisdiction. Federal infrastructure initiatives related to P3s and high priority highway projects were also announced. It is worth noting the details associated with potential requirements or limitations on usage for this infrastructure funding have not been clearly defined.

As with TFF, these initiatives are contingent on the passing of federal budget legislation, likely this June.

The federal budget also indicated discussions on resource revenue sharing will continue as part of devolution negotiations. Natural resource revenues will be treated separately from TFF. To be consistent with equalization, 50 percent of these revenues will be excluded from the offset calculation against the TFF grant up to a yet to be determined overall cap.

I am pleased to report the government’s overall financial situation at the end of the 2006-07 fiscal year is generally consistent with previous projections. Our cash position is somewhat better than expected due to capital carryovers and one-time funding received from Canada.

When I presented the 2007-08 GNWT budget in February, I noted the uncertainty surrounding the government’s revenue picture. I committed to consulting with Members on the allocation of any further revenues resulting from the federal budget, and to return during this session with a revised expenditure plan.

Because of our strengthened fiscal situation, and following consultation with the Standing Committee on Accountability and Oversight, the government will now advance a proposal for modest increases in spending on selected programs and services during the 2007-08 fiscal year. The proposal is based on key areas identified in the government’s strategic plan established at the beginning of the 15th Legislative Assembly.

Mr. Speaker, I am pleased that the hard work of the past few years has been successful. We have appropriate territorial formula financing arrangements and an increased borrowing limit on which to base our fiscal planning.

During the term of this Assembly, we have successfully stabilized our fiscal picture while investing in key programs and services. The fiscal responsibility policy and an Aa1 credit rating from Moody’s Investors Service are examples of our commitment to responsible financial management.

Government must continually examine activities, set priorities and make adjustments when necessary. As the term of the 15th Legislative Assembly comes to a close, we can be confident that we have achieved many of our financial goals and built a solid foundation for the legislators of the 16th Assembly. Thank you, Mr. Speaker.

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