Debates of October 14, 2005 (day 10)

Thank you, Mr. Chairman. The PPD serves 15 communities today. How many of those are resupplied by barge or summer resupply only, and how many are winter resupplied? Thank you, Mr. Chairman.

Thank you, Mr. Braden. Mr. Minister.

Thank you, Mr. Chairman. I believe we do resupply by barge to six communities. Thank you.

Thank you, Mr. Minister. Mr. Braden.

Thank you, Mr. Chairman. I don't have any further questions.

Thank you, Mr. Braden. General comments from Members? Mr. Yakeleya.

Thank you. Just a comment here to the Minister in terms of the surplus that is projected in this department. Is there any type of assistance in helping with the high costs of fuel in the communities in the Northwest Territories? Because of this surplus we have projected here, is there any type of discussion going on in assisting the people like granny from Nahanni, in terms of the high costs of fuel and the amount of money we get in this department? Thank you.

Thank you. Mr. Minister.

Thank you, Mr. Chairman. As I stated in my opening comments, the initial surplus of the fund that we identified was $472,000. To help offset the increased price of product in communities, we’ve dipped into that fund and that’s the $230,000 we earmarked as a loss. We are offsetting the cost of home heating oil by 10 cents per litre in the communities we service. So in a way, we are trying to help those in the communities we service. We can only do this because we have that small surplus there. Once that surplus is gone, we are at the full cost of product price that will be charged in each community. Thank you.

Thank you, Mr. Minister. Mr. Yakeleya.

Thank you, Mr. Chairman. The concern I had is he just indicated that the long-term plans is when we run out of the funds. What then? What are people to expect and what type of assistance will this revolving fund do to help the people? Thank you.

Thank you, Mr. Yakeleya. Mr. Minister.

Thank you, Mr. Chairman. The stabilization fund is to do what we just spoke of, to try to offset some of the sharp increases. As well, it can provide for decreases in prices if there was surplus there. The way we are going now, we would find if we kept up the practice that we had in the past, we would be in a deficit position of close to $1 million if we didn’t make some of the changes that we had in the last year. Because of the act and direction given of full cost recovery, we would have to come in for some drastic increases. These latest increases are part of a result of going full cost recovery on the product, as well as the increased price of the product that we have had to pay from the distributors. Thank you.

Thank you, Mr. Minister. Mr. Yakeleya.

These are my final comments to the Minister. The surplus is also going to be credited to the consolidated revenue fund. Why are we throwing this into this huge fund where it will be distributed across the board? Can’t we help people with their home heating costs rather than distribute it right across the board? Thank you.

Thank you, Mr. Yakeleya. Mr. Minister.

Thank you, Mr. Chairman. The dollars that are identified as surplus would stay within the stabilization fund until they exceed the amount of the stabilization fund. So with this amendment we are proposing, our stabilization fund would be set at $1 million. If our surplus was to grow beyond $1 million, anything over $1 million would go into the consolidated revenue. We would keep up to that maximum amount. The same would go the other direction. If we were to go in a deficit of more than $1 million, then we would have to adjust our prices to come back up to offset that deficit.

So with the maximum allowable amount that we are proposing here, we feel we would be able to maintain that or stay close to neutral on the amount without having to drastically make changes to prices or to be putting money back into the consolidated revenue fund. If we had so much surplus that we went beyond the maximum allowable here, we would have to look at reducing our prices. Thank you.

Thank you, Mr. Minister. Mr. Yakeleya.

Mr. Chairman, can the Minister advise me how the revolving fund will be impacted by the contractual arrangements we have with the small communities I serve in the Sahtu and assist them in the operations?

Thank you, Mr. Yakeleya. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, the contractual arrangements we have for dispensing of fuel in the communities is done on a community-by-community basis and seeing who would be interested when we put these packages out for response from the public. The fund isn’t set up to affect the price of those contracts for delivery. What the fund is there to do is mitigate the increase that we would have to go forward with if the price of the product has climbed as much as it has. From last winter’s resupply through to this summer, there’s been a drastic increase in the price of product. By example, we have lowered the impact on communities with home heating oil by 10 cents because we are in a positive situation in this fund. At the same time, we have to ensure that we don’t go into a negative side of the balance, and the directive now given is that all communities would be very close to 100 percent cost of the product being delivered to the community. Thank you.

Thank you, Mr. Minister. Mr. Yakeleya, thank you. General comments. Clause by clause. Mr. Villeneuve.

Thank you, Mr. Chairman. I just have a quick question on the stabilization fund, also. Just getting back to what the Minister was saying that communities are going to start paying 100 percent of what the actual product is to deliver to the communities, the stabilization fund that offsets projected losses and is not offset by revenue…It’s to offset any changes to the cost in the communities. How would that happen in the first place? If you buy a product and you ship it to the communities and you put a price on it that’s going to recover the cost or hopefully most of it, how would the price get changed? Even if the market changes, there was a cost that was incurred and the market really doesn’t have any effect on the communities that are annually supplied unless the cost changes from year to year. How would that stabilization fund offset any changes that could happen during the middle of the year? I just don’t see how it works. Maybe the Minister can clarify that for me. Thanks.

Thank you, Mr. Villeneuve. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, before we went to a full cost recovery model for the pricing of the products, there were some communities that were paying more than the actual cost of product in that community and helping some of the smaller communities. We’ve had to make the change because it was deemed not to be fair to those communities that would have to pay more than what it cost for them to get that product to the community. The stabilization fund itself would come into impact in the areas and times when refuelling does happen. So there would be no changes throughout the year as long as we did not run short of product and resupply at another time of the year. The goal is with our tankage in the communities and with the expected usage of the fuel that we have in those communities, we should not be running out of product. So there wouldn’t be an impact until the following resupply time.

It was asked earlier how many communities are serviced by barge. We have six communities serviced by barge alone. There are two other communities who receive barge shipments along with winter road shipments. So there are eight communities by barge, but they also receive winter shipments and that can change the price, so it wouldn’t be on an annual basis. So the communities we serve through the petroleum products division are somewhat protected from the day-to-day fluctuations that we feel in the larger communities where it is serviced by the private sector. That is both a good thing and a bad thing, because through a community in the private sector, the price of the product would climb and be adjusted monthly or daily, in some cases, whereas in our case, the price would not be adjusted until we had a resupply and there could be a significant difference between a previous year’s product price and the new price we pay on the same product. That’s what we found ourselves facing this summer. Thank you.

Thank you, Mr. Minister. Mr. Villeneuve.

Thank you, Mr. Chairman. Thank you, Mr. Minister. I just want to get this stabilization fund straight. I know in the past when some communities paid a little more than they would have had to offset the higher cost of fuel in some of the other communities, that wouldn’t affect the stabilization fund at all, or it shouldn’t. What criteria are used to get this stabilization fund implemented to a community? Is there some kind of cost ratio that is used to determine when a community needs some of the stabilization money to offset the high price in retail gas prices? How does the government determine when the stabilization fund gets tapped into by a specific community other than fuel shortages like Lutselk’e with the planes going in? I am sure the stabilization fund kicked in on that. Other than that, besides the communities running out of fuel, what criteria are used? Is there a 30 cent difference, 10 cents or what? What is the government’s rationale for when the stabilization fund kicks in for any community? Thank you.

Thank you, Mr. Villeneuve. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, the stabilization fund, as it's set up, would not address community-by-community specifics. What we would look at doing, as we have done in this case, is to look at the total amount of the product cost and how much of an impact that would have. We set an across-the-board 10-cent reduction in the price of home heating oil. So in each community it isn’t set at a flat rate, either. The cost of that product to get to that community is 100 percent cost recovery as we go forward here. Every community would pay for the price of the product, the shipping and the contract of that community to have it delivered. So we wouldn’t necessarily do it where one community saw a drastic increase and try to address just one community situation. Because the product price across the board has gone out so much, we looked at implementing just a 10-cent reduction on the home heating oil across the board. So that’s for every community we service through the petroleum products division.

The formula that we would look at is based on when resupply is done; we would look at the amount of increase and look at the affordability issues. In this case, we focussed on home heating oil because home heating oil is essential compared to gas for vehicles, and so on. So that is why we’ve targeted the 10-cent reduction for home heating oil. For more detail on the stabilization fund, when you do receive costs or refuelling happens and the ratios used, I can have Mr. Aumond provide more detail if committee members want.

Thank you. Is that agreed by committee? Mr. Aumond.

Thank you, Mr. Chairman. This year the price of fuel, diesel fuel in particular, which is used for home heating fuel, increased by approximately 40 percent. We were unable, as a program, to absorb those kinds of increases without putting ourselves into a serious deficit situation where we wouldn’t really recover without having to impose more drastic price increases that we just saw recently.

As the Minister indicated, we were able to use the surplus funding, half of it approximately this year, to mitigate the increase in the price of fuel by 10 cents a litre. So we are charging right now about 10 cents per litre less than the full cost across the board. FMB made the decision to target home heating fuel as it’s really a requirement for shelter.

As time goes on, if nothing changes and we continue to subsidize heating fuel, then eventually we will have no more surplus left and we would be in a deficit situation, which would require another decision as to whether or not we wanted to continue to provide that type of relief for people in the small communities.

Before we went to full-cost pricing, I guess we were imposing a blended approach whereby some communities, or for some products, we would be making a profit and use that to offset the costs in the higher-cost communities. As long as the price of fuel was in a relatively narrow range, as it was over the past four previous years, we were able to do that. Since the price of product has spiked dramatically, we would really have to increase the price in those communities by such an extent that it would be really unfair to ask them to provide that type of a subsidy to the other communities.

That leads us back to the approach of going back to full-cost recovery. In terms of the matter of using the stabilization fund to mitigate these prices into the future, it will depend on what the price of product is in each community and also what the community contractors are charging us to dispense the delivery in the communities. Those are the two cost differences between communities in terms of the cost components of the price. So as long as those two continue to move, then the price will move in accordance. Depending on how high the price of fuel goes, then we will have to make a decision on how much of the stabilization fund into the future we want to use to mitigate or offset those increased costs. I guess one way you could look at it is what is really affordable in terms of home heating fuel versus gasoline which is a more discretionary product. Hopefully that answers your question. Thank you, Mr. Chairman.

Thank you, Mr. Aumond. General comments. Are Members agreed to go clause by clause?

Agreed.

Bill 8, An Act to Amend the Revolving Funds Act. Clause 1.

Agreed.

Clause 2.

Agreed.

Bill as a whole?

Agreed.

Does committee agree that Bill 8 is ready for third reading?

Agreed.

Bill 8 is now ready for third reading. Mr. Minister, I would like to thank you and your staff, Mr. Aumond and Ms. Heder. Thank you very much.

We will just wait for a staff change until we go on to Bill 9. Thank you.

Thank you, committee members. We will now proceed with Bill 9, Municipal Statutes Amendment Act. At this time, I would like to ask the Minister, Mr. Michael McLeod, for his opening comments. Thank you.

Thank you, Mr. Chairman and honourable Members. I am pleased to speak to you today about Bill 9, Municipal Statutes Amendment Act. I would like to take the opportunity to thank the members of the Standing Committee on Governance and Economic Development who conducted the public hearing on Tuesday, October 11th. Those Members were Mr. Menicoche, Mr. Ramsay and Mr. Hawkins under the able leadership of Mrs. Groenewegen, the chair, and they provided very thoughtful questions and comments on the proposed amendments. Bill 9 contains three amendments to the municipal statutes, which include the Charter Communities Act, the Cities, Towns and Villages Act the and Hamlets Act.

The bill before you proposes three changes to each of the municipal statutes, and all three changes are in the nature of housekeeping amendments. By way of background, the current municipal legislation was passed during the Sixth Session of the 14th Legislative Assembly and became effective on April 1, 2004. That legislation modernized the Charter Communities Act, the Cities, Towns and Villages Act and the Hamlets Act. Since then, the Department of Municipal and Community Affairs and community governments have worked with the new legislation. That experience has made it apparent that the amendments contained in the bill before you are required.

The first amendment deals with refinancing of long-term debt. Under the current legislation, if a community government wishes to refinance long-term debt, they must seek further approval of the voters or the Minister or both. This is true even when the original debt was approved by the voters or the Minister. This procedure is both time consuming and very costly for the community governments.

The amendment we propose will enable community governments to create a bylaw authorizing refinancing of long-term debt that does not require the approval of either the voters or the Minister, so long as three conditions are met. First, long-term debt must be used solely for the purposes of refinancing an existing long-term debt. Second, approval of either the voters, the Minister or both was obtained for the original debt or it was exempt from such approvals. Third, the principal amount to be borrowed does not exceed the principal amount borrowed under the long-term debt being refinanced.

The second amendment proposed is for written notice. This amendment will require a person who intends to bring an action for loss or damage from snow and roadways or just repair of roads to provide written notice within 30 days of the event that gave rise to the action. Communities can establish a longer notice period through a bylaw.

Communities have expressed concern that currently, a person can indicate an intention to sue verbally to anyone associated with a municipality in an informal way that may not be recognized as serious notice that an event has occurred. The proposed amendment will clarify that if an event has occurred, it must be indicated in writing to the senior administrative officer. Clarifying the intent of this provision will have a positive impact on the liability exposure of community governments.

The third amendment deals with transferring of unpaid land-based service charges to property taxes in communities that are municipal taxing authorities. Before the coming into force of the new municipal legislation, municipal taxation authorities could transfer unpaid water and sewer bills to property taxes. That function was inadvertently omitted in the comprehensive amendments and needs to be reinstated. This amendment is intended to do just that.

Until this proposed amendment is passed, municipal taxation authorities have to carry the unpaid water and sewer charges while continuing to attempt to collect them. Once this amendment is approved, municipal taxing authorities will have again have the authority to transfer unpaid water and sewer charges to property taxes and effect collection through the property tax process.

Mr. Chairman, I am pleased to advise you that the department has consulted with the Northwest Territories Association of Communities and they are supportive of the proposed amendments. Mr. Chairman, I look forward to the opportunity to answer any questions members of the Committee of the Whole may have. Thank you, Mr. Chairman.

Thank you, Mr. Minister. Mrs. Groenewegen, opening comments. Thank you.

Thank you, Mr. Chairman. The Standing Committee on Governance and Economic Development met on October 11, 2005, to review Bill 9, Municipal Statutes Amendment Act. This act makes minor amendments to the Charter Communities Act, the Cities, Towns and Villages Act and the Hamlets Act.

The committee asked for an explanation of the new amendment that deals with transferring unpaid service charges to property taxes. The amendment will allow a municipal taxing authority to recover any outstanding bills or fines that relate to real property and charge them against property taxes. A homeowner, for instance, could lose their property over unpaid parking tickets or library funds. The committee was particularly concerned that there is no dispute resolution mechanism associated with this municipal power.

The Minister and his staff advised that this function was inadvertently omitted in the comprehensive amendments and needs to be reinstated. The Minister further advised that communities have requested this amendment be made because they have had to carry unpaid water and sewer charges, while continuing to attempt to collect them, and this has caused a hardship.

As part of the New Deal, this is a tool that will allow all municipalities to collect outstanding fees that are owed to them. Finally, the Minister advised that there are no dispute mechanisms, but an appeal process can be put in place by the municipalities. Following the clause-by-clause review, a motion was carried to report Bill 9 to the Assembly as ready for Committee of the Whole. This concludes the committee's general comments on Bill 9. Individual committee members may have questions or comments as we proceed. Thank you, Mr. Chairman.

Thank you, Mrs. Groenewegen. At this time I would like to ask the Minister if he would like to bring in any witnesses.

Yes, I would, Mr. Chairman.

Would the Sergeant-at-Arms please bring in the witnesses? Thank you. Does committee agree?

Agreed

Agreed. Thank you, Mr. Minister. Can you introduce your staff please?