Debates of October 15, 2004 (day 21)

Agreed.

Maybe we will take a short, 15-minute break and come back at 12:00. Thank you.

---SHORT RECESS

Thank you. I would like to call Committee of the Whole back to order. The first order of business is Minister’s Statement 48-15(3), Sessional Statement. I would like to open up the floor for comments on that statement. Any general comments? Is it the wish of the committee that we proceed with the next order of business?

Agreed.

That order of business would be Bill 9, Write-off of Assets and Debts Act, 2004-2005. We are going to start with the Minister responsible, Mr. Roland.

Thank you, Mr. Chairman. The purpose of the Write-off of Assets and Debts Act, 2004-2005, is to authorize the write-off of debts listed in the schedule to the act. Pursuant to section 24 of the Financial Administration Act, the write-off of assets or debts exceeding $20,000 must receive Legislative Assembly approval.

Pursuant to section 82 of the Financial Administration Act, the write-off of debts owed to a public agency exceeding $20,000 must receive Legislative Assembly approval.

The write-off of debts owed to the Workers’ Compensation Board exceeding $50,000 must receive Legislative Assembly approval.

The write-off being proposed in this act will not require a new appropriation. The write-off will be charged against allowances for bad debts, which were established in the department budget at the time it was determined that collection of the debt would be unlikely.

I wish to emphasize that the write-off of a debt does not relieve a debtor of the liability for repayment or mean that the government will not continue to attempt to collect the outstanding amount.

Through continued reviews by my staff, future recovery of the debt may still be achieved. In addition, in the case of debts owed by companies, we track the principals of each firm for future credit reference.

Mr. Chairman, I or the appropriate official would be prepared to answer questions on the proposed write-off at the appropriate time. Thank you.

Thank you, Mr. Minister. Mr. Menicoche.

Thank you, Mr. Chairman. The Standing Committee on Accountability and Oversight reviewed Bill 9, Write-off of Assets and Debts Act, 2004-2005, at its meetings of August 24, 2004, and October 12, 2004. This bill will write off $576,096.10 in assets and debts owed the Government of the Northwest Territories, its agencies and boards.

The committee would like to thank the Minister and his officials for presenting this bill. The bill authorizes the write-off of debts in accordance with sections 24 and 82 of the Financial Administration Act which requires legislative approval to write off debts of more than $20,000.

Mr. Chairman, no debt or obligation or part of a debt or obligation that is written off shall be remitted, satisfied or forgiven as a result of the write-off. The debt still exists, but is no longer carried as an asset by the government and interest no longer accumulates.

The write-off will not require a new appropriation as the departments have already established an allowance within their budgets once the debt was determined to be uncollectible.

Mr. Chairman, the committee had concerns with the Department of Education, Culture and Employment providing grants to cultural organizations when they had not received a proper accounting of the grant money provided in previous years. The committee will be looking for evidence that this situation will not occur again.

The committee is also pleased to hear that the Minister is looking at providing the names of directors of organizations who default on loans, as part of the schedules attached to the bill. This may help in ensuring that government money is properly accounted for.

Mr. Chairman, following the committee’s review, a motion was carried to report Bill 9, Write-off of Assets and Debts Act, 2004-2005, to the Assembly as ready for Committee of the Whole. Individual members of the committee may have comments or questions as we proceed. Thank you, Mr. Chairman.

Thank you, Mr. Menicoche. Any comments? Mr. Villeneuve.

Thank you, Mr. Chairman. Just looking at the debts written off and the total of the bill of $576,000, it’s good to know that the debt will still be an outstanding amount in the government’s books, but there will be no interest accumulating and the government will still look for ways to collect the money.

I just wanted to comment on the Minister’s initiative at looking at providing names of directors of organizations who default on loans. I want to remind the Minister that I will support that initiative and I think it’s something we should do because the organizations all want to remain confidential and not be made public with respect to any loans they have outstanding or loans they have in the works or any loans they are defaulting on.

I know with FMBS, and as far as the debts of residents of the NWT that own taxation money to the GNWT, there is no scrutiny for the government in releasing their names or the amounts owing to the government. I just wonder what the difference is when dealing with individuals who owe $3,000 to $10,000 to the GNWT, that their names are splattered all over the News/North every year and there is a full page on all people who have outstanding taxes owed to the GNWT, and why people that are having half a million dollars written off are getting more consideration and less transparency for the public to have any input on what they owe, what they borrowed, and what the government is writing off. I would like the Minister’s opinion as to treating these individuals who owe just a few dollars and why they are treated differently from organizations that borrow millions of dollars from the government. Thank you.

Thank you, Mr. Villeneuve. Mr. Roland, would you like to bring in any witnesses at this time?

Thank you, Mr. Chairman. Yes, I would.

Does the committee agree?

Agreed.

Can the Sergeant-at-Arms escort the witness in, please? Thank you. Thank you, Sergeant-at-Arms. Mr. Roland, can you introduce your witness, please?

Thank you, Mr. Chairman. Mr. Chairman, with me this afternoon is Mr. Lew Voytilla, secretary to the FMBS.

Thank you, Mr. Roland. Were you able to hear the question that Mr. Villeneuve asked earlier? Thank you. Would you like to respond, please?

Thank you, Mr. Chairman. Mr. Chairman, Mr. Villeneuve raised a couple of examples in the sense of bad debts versus the publishing of names in the area of property taxes. The situation that comes out of this is how the different acts work. For example, under the situation of municipal taxes, specifically the act requires that that information be made available. On the other concern about making it known who’s applied, what debts, how much debt is attached, is something that we have heard and taken into consideration. I am moving ahead in bringing to my FMBS colleagues the change that we have noted, and looking at changing that to bring it up to date. Thank you.

Thank you, Mr. Minister. Mr. Villeneuve.

Thank you, Mr. Chairman. I thank the Minister for consideration on that point, anyway. The reason I’m questioning it is that due to the fact that a lot of the large debts in the $30,000 to $50,000 range, the nature of the debt is listed as unaccounted contributions. I think it would be prudent of this government to let the public know that the associations the government is dealing with in trying to recover some of the debts and who is actually running these organizations and whose direction it is that is resulting in the accounting responsibilities of the organization. I think it would help the public to be informed that, yes, these people sit on this board and they have an $85,000 contribution that they were unable to account for to the GNWT. I think people would want to know who these people are and what they’ve done with that money. When the government can just write off a $50,000 to $80,000 debt without batting an eye, and on the other hand of the fiscal framework people who owe a minimum amount of dollars with respect to their taxation bills are all of a sudden put out into the public spotlight through the media that shows what little money they do owe and how long they’ve been outstanding and some of the ramifications that might come about because of it.

I just wanted to let the Minister know that it would be helpful for the public and prudent on the government’s side that we do publish board members and all associated parties that have received contributions but have come back to the government without any certified audits to account for that money and that they start treating all the individual residents of the NWT as fair and as equitable as they do the corporations they lend money to today. Thank you, Mr. Chairman.

Thank you, Mr. Villeneuve. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, as I stated earlier, I believe we are in sync with what the Member is stating as we go forward. We are intending to change the policy to do just as the Member has stated in recognition that we have to be more accountable and those that receive money from us need to do the same, as well as the principle of being accountable to all citizens. We can no longer differentiate if it’s a private individual in income tax versus a business or a non-profit agency, and that’s what the majority of this here is around non-profit groups. They’re affected and as we go forward to do this and look at changing the policy, we also have to let everybody know that as they go forward to put their names on this that this is one of the potentials. I think we’re in agreement here and I’m going forward on that basis to my FMBS colleagues. Thank you.

Thank you, Mr. Roland. Mr. Villeneuve.

Thank you, Mr. Chairman. I thank the Minister for that response. I just wanted to ask the Minister what his feelings were toward…I know in the paper he stated that all these outstanding property taxes of residents of all the communities that haven’t been physically assessed to date are still outstanding and that the FMBS can’t even consider writing off these debts which don’t even come close to the amount of debts that this government has written off for corporations to date. When we’re talking a $100,000 write-off in taxation debts for a certain group of people, there is a larger group of people that are going to be happy with this government that they’re taking into consideration their issues; whereas, on the other side of the board, this government is writing off $800,000 to a single corporation in one sitting. If they paid as much consideration to the individual ratepayers as they did the people that get loans off the government, I think the residents of the NWT would be a lot more trustworthy and have more confidence in the government’s way of doing business.

I just want to ask the Minister if he’s tallied up all the outstanding taxes to date and considered the thought of…

Excuse me. Thank you, Mr. Villeneuve. Can I just interrupt the committee? Can we have some quiet here? Mr. Villeneuve is trying to talk and I’m sure the Minister’s having a hard time trying to listen to the conversation. Thank you. Mr. Villeneuve.

Thank you, Mr. Chairman. I just want to get the Minister’s thoughts on the possibility of writing off these outstanding debts that many members of the NWT have to date.

Thank you, Mr. Villeneuve. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, the Member stated, again drawing a comparison between the taxes we collect as a government versus this act, the forgiveness of debts; write-off of debts. Sorry. Under the legislation that deals with our taxes, it’s very clear on what needs to happen and there is no program for forgiveness of taxes that can follow what we’re doing here. Although we would look at that as a government as to what initiatives; but when we look at the write-off of bad debts, the one thing that continues to happen, as I stated in my opening comments, is we continue to monitor these and where we can, we continue to collect on them. It does, however, stop the interest from accruing, but it is not forgiveness. This is a write-off of debts, taken off the books, but we do still monitor these to see if at some point we may be able to collect them. Thank you.

Thank you, Mr. Minister. General comments. The time’s up for you, Mr. Villeneuve. Mr. Menicoche.

Thank you, Mr. Chairman. Just with respect to some of the noted deficiencies, as we’re reviewing Bill 9, with regard to providing grants to organizations that have not received a proper accounting from the year before, I’m just wondering, Mr. Chairman, if the Minister can comment on the existing guidelines to providing funds to organizations when they haven’t really been accounting for previous usage. What are the guidelines in use today? Thank you.

Thank you, Mr. Menicoche. Mr. Minister.

Thank you, Mr. Chairman. Mr. Chairman, the guidelines are clear that there should be a proper accounting for the funds that are distributed, and there should be a reporting back of those. As the departments go forward in looking at how those expenditures are made, and if they were in accordance with the proposals put forward, they would be dealt with in that appropriate manner. I know the issue of concern was raised with committee, and we’ve notified the appropriate department. I believe, in this particular case, Mr. Dent may have information to respond to that particular issue that the Member is raising.

Thank you, Mr. Minister. Mr. Dent, would you like to…

---Laughter

Thank you, Mr. Chairman. Could I have the question restated, please?

Thank you, Mr. Dent. Mr. Menicoche.

Thank you very much, Mr. Chairman. I was just looking for some assurance of what systems are in place so the public will have confidence in our system that we are not providing grants and contributions to organizations that haven’t had proper accounting for prior years’ contributions. It happened, of course, in this case. I’m just wondering what mechanisms are in place and, indeed, if there was a deficiency, will they be addressing it with some new type of guidelines? Thank you.

Thank you, Mr. Menicoche. Mr. Dent.

Thank you, Mr. Chairman. Yes, there’s always a concern when there’s criticism when we lose money. There’s a criticism when we don’t have enough accounting so money isn’t recovered. The issue of accountable advances, though, is hard to get past. It would be difficult for us to offer up much of our programming dollars if we didn’t allow the money to go out in advance of the program being undertaken. So we have to continue, I think, with the process of allowing for accountable advances. The goal is, of course, to make sure that we are watching for instances where the organization may be getting in trouble, and making sure that we aren’t continuing to advance good money after bad, if you will. That’s certainly something that we will be doing. In this instance, the department has followed up on the issue. There were obviously extensive efforts made to recover the funding and to pursue invoices to recover the monies, but we didn’t get the money and the accounting was never actually provided either. The department is being more and more vigilant, but we are going to have to continue to use this kind of advancing of monies in order to make sure the non-profit organizations can get their operations underway. Thank you, Mr. Chairman.

Thank you, Mr. Dent. Mr. Menicoche.

Thank you, Mr. Chairman. The committee, of course, is concerned and I was just wondering what has actually been done. Is there any evidence that the government is acting so that this situation will not happen again? Could the Minister of FMBS answer that for me, Mr. Chairman?

Thank you, Mr. Menicoche. Mr. Minister.

Thank you, Mr. Chairman. When it comes to the role of FMBS here, we end up dealing with these as we are now, in the form of reporting it to the Legislative Assembly. The other role we would play is ensuring the departments follow the guidelines that are in place, and that’s something we’ll be more vigilant in is ensuring that the guidelines and policies are being followed. If we see there are specific deficiencies in what we’re doing now, we’d work to address those. As Mr. Dent stated, the way the money would flow in your first year of operations and looking for an accounting, they can give quarterly advances in dealing with those and trying to get the information flow. As we know, in a lot of these societies or non-profit organizations are small groups and they might not all have the expertise as board members change. That still doesn’t allow for not following the processes and policies established. I believe Mr. Dent has further detail to this as well, Mr. Chairman. Thank you.

Thank you, Mr. Roland. Mr. Dent.

Thank you, Mr. Chairman. The Member had asked for specific examples. What the Department of Education, Culture and Employment is endeavouring to do is reduce the numbers of advances that are given out and the amounts. While recognizing that they’re still necessary, there’s an attempt to limit the amount that is outstanding at any one time, and to that way improve on the requirement for accounting to be delivered before we advance further funds.

Thank you, Mr. Dent. Mr. Menicoche. Thank you. Mr. Zoe.

Thank you, Mr. Chairman. Mr. Chairman, I realize that these are debts being written off from previous years. Nevertheless, just to follow up on my colleague from Nahendeh, when the department knows that the cultural organization hasn’t accounted for the previous year, I understand that in the new fiscal year they can ask for another grant and it could be done in a certain manner. If they could get some sort of funding in advance for the first quarter, to get their second quarter they should be able to provide accounting for the previous year so that it’s not a backlog. They should be reporting on a quarterly basis so they can account for it. So at the end of the day, you won’t have that much accounting to do. Is that the type of mechanism that we have in place now, so that this type of thing doesn’t occur in the future?

Thank you, Mr. Zoe. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, the member is accurate in his assumption of the policies as they work now. We do make an accounting of advances on a quarterly basis and encourage that information would get back to the departments before they proceed. In a number of these cases, for some reason, that wasn’t done in the past. As stated by the Minister, there have been a number of changes in the way that we deal with these. That policy is in place about proceeding on to the next year and doing it on a quarterly basis. Thank you.

Thank you, Mr. Roland. Mr. Zoe. Thank you. General comments on Bill 9 by members. Does the committee agree to go clause by clause?

Agreed.