Not at this time.
I think it is important that we do realize we have the private sector out there that we have to take in account. They have made a lot of capital investment in regard to properties. I know there are many questions in regard to how people are going to recoup their investments. A lot of these properties, especially in Inuvik, have been just newly acquired. These people have millions of dollars laid out over the next number of years in order to pay off those loans they got from the bank to pay down these assets. They will have to have some security over a number of years.
I think it is important that we aren’t seen to compete against the private markets or have to put people in the situation where they’ve got to get out of the business because they’re losing money. I believe this is exactly what’s going to happen with this project, especially in Inuvik region.
I believe there are a lot of risks taken by people getting into this sector. I know that the Gwich’in purchased facilities off the Inuvialuit because they wanted to consider that one as their portfolio. Part of that arrangement was that they were going to require assets in the Inuvik region and build up a portfolio of retail assets. Yet those assets are old. As with any old asset you have to make major investments to upkeep those assets. I know there have been a lot of discussions, especially coming from the deputy, saying: well, there are all these problems with air handlers; there are problems with elevators; there are problems in regard to access. Anywhere else in the territory that this government purchased office space, just part of that lease arrangement is intended improvements. Sure, you can have all the intended improvements you want, but at the end of the day you have to pay for them. Using those as excuses shouldn’t be a reason that we try to run these businesses out of town. For me that’s exactly what I see happening in this scenario.
I would like to ask the Minister: what’s the term of leases that you mentioned in Inuvik? When are those leases up? Exactly what are the renewal dates on those leases, and what’s the term on most of the leases?
Thank you, Mr. Krutko. Minister Miltenberger.
Thank you, Mr. Chairman. The commitment has already been made that there’s not going to be any loss of rental revenue. The commitment is made to the current landlords that their space would still be used by government. Ninety-three per cent of what we now currently have in Inuvik is leased, when the average is 60 per cent lease, 40 per cent rent.
So it’s very clear that we have a commitment to supporting the private sector in Inuvik, to the point where it’s been noticed that, in fact, we are over-represented on one side of that particular breakdown. The years of the leases for all existing space we do not have with us, but we can commit to get that information or maybe look to the Minister to see if he wants to add anything further. We’ll commit to get the information on the terms of the leases.
Again, Mr. Chairman, I think it is important that we do understand what the retail market is in Inuvik in terms of people’s leases, when those leases are up and, more importantly, what the implications are going to be if there is a downtrend in the market with people’s ability to borrow to do these retrofits we were asking for. The people made major capital investments in these assets just a number of years ago. As I stated, less than four to five years ago these assets were acquired. So these people are in it for 20 to 30 years, and now, as government, I do not think we should be in the business of putting the private sector out of business for the comfort of a few departments.
Those departments that are there already are not in the dire straits you’re making them out to be. I’ve been in the Public Works office in Inuvik in the Perry Building. The sky isn’t falling quite yet. You go over to the MACA office where they’re located, and that office looks like it’s in pretty good shape. There again, you don’t have ramps or anything for disabled people to get into that facility, but you’re asking the private sector to do it.
I think you have to think long and hard about this decision. There will be implications, with regard to 47,000 square feet of office space, for space in Inuvik, which will have a detrimental effect on those assets in Inuvik at the present time. You’re talking about facilities in Inuvik that are getting up there in age. Some space is over 30 years old. Yes, they are aging pieces of infrastructure, but the private sector can only afford to maintain that infrastructure if they have tenants in those buildings and if they know they’ll be able to maintain and pay down that asset.
Again, I ask the Minister that before you move on this project, you do an independent assessment and evaluation on market disruption with regard to the Inuvik retail market.
The Member’s made the case repeatedly. We’ve responded repeatedly as to why we’re proposing what we are proposing. Ninety-three per cent of the space we now have is either leased or rented. The balance of most portfolios would be 60 per cent leased or rented and 40 per cent owned. A lot of the buildings we’re replacing are our own. They are old and aged, showing the wear and tear — advanced stages of decrepitude in some cases. We’re of the opinion that this is the best way to proceed.
Thank you, Mr. Miltenberger. I have other people on my list. We’ll move to 4-4. Public Works and…. Mr. Krutko.
Thank you, Mr. Chair. I’d like to move a motion.
Thank you, Mr. Krutko. Proceed.
I move that $12 million be deleted from the activity Asset Management under the Department of Public Works and Services, Capital Estimates 2009–2010, on pages 4-4 and 4-5, for the GNWT multi-use facility and records storage facility project; and further that the Department of Public Works and Services conduct a market disruption analysis on the potential impacts of the proposed multi-use office facility and record storage facility on the Inuvik office space property markets and report back to the Standing Committee on Priorities and Planning by January 2009; and furthermore that the Department of Public Works and Services conduct technical evaluations of the government-owned ‘Department of Public Works and Highways Project Office’ and the ‘MACA Offices Building’ in Inuvik and that the technical evaluation be provided to the Priority and Planning Committee by January 2009.
A motion is on the floor and is being distributed now. The motion has been distributed and is in order. To the motion, Mr. Krutko.
Thank you, Mr. Chair. As I’ve stated in the last two days, I believe that this project will have an impact with regard to the Inuvik market. I stated that there has been private sector interest in providing this service in the Inuvik region. We have other regions throughout the Northwest Territories — Fort Simpson, Norman Wells and other places — where the private sector has taken the risk and provided office space to government.
It has been done here in the capital for a number of years, going back to when the decision was made to relocate the capital city to Yellowknife from Fort Smith. You have companies in the Northwest Territories who have made major capital investments in the retail market by way of buying up assets, developing their portfolios; through blanket developments, northern properties, aboriginal business development corporations.
This sends a bad message to those individuals who have taken the risk and the time to make these capital investments, who wonder why they even invest in the Northwest Territories. If the Government of the Northwest Territories is going to come in at the eleventh hour and compete against them, knowing that our risk isn’t anything close to them having to go to the bank…. We can go to the Legislative Assembly and get $20 million to build a building. These individuals have to go to the bank and borrow millions of dollars at the going rate; without people in their offices, they will not be able to pay down that asset.
I think the implication of this sends the wrong message to the retail market in the Northwest Territories and, more importantly, the market in Inuvik. I stated earlier, just from the information I received this morning, that they have some 7,000 square feet of office space that is vacant in Inuvik, not calculating the amount of space that’s in the Perry Building.
I think it is also important to realize that there is a downturn in the market. You have to realize that the banks aren’t lending anymore as they used to. There is an effect in regard to people’s investments in the Northwest Territories. If this is the case, maybe aboriginal corporations should quit investing in the Northwest Territories and take their investments and go elsewhere. This is exactly the message this government is sending to development corporations who have taken a risk — and taken it some four or five years ago — and now realize only five years into it, “Sorry, you have competition, and oh, by the way, it’s the Government of the Northwest Territories.” I believe that sends a bad message in regard to the so called 47,000 square feet of space that is now going to pop up on the books in Inuvik.
I think it’s important to realize that this government got out of properties by selling off the Lahm Ridge Tower and to also look at government assets in the past. They were leaving that up to the private sector. Look at it in regard to the Yellowknife market. A courthouse. You have companies that have made a major capital investment in retail in the Northwest Territories. It’s important to realize that in this decision, which was clearly stated by the Minister of Finance, no assessment has been done to see if there would be a market disruption or not. I believe we have to do due diligence. If we have policies in place that fine the private sector, that say you can’t set up an extra office building or you can’t set up a tourism business or a hotel business unless you do a market disruption plan…. We require that from the private sector, but we’re not even practising what we preach with market disruption.
I ask that we allow for this government to take the time to do the assessments and ensure that we do due diligence by doing a market disruption analysis to see exactly what this $20 million project is going to mean in long term effects on the retail market in Inuvik. I think it is imperative that we, this Legislature and Members of this House, ensure that before we make any capital investment.…
By the way, it’s $20 million dollars, and by the way, pink slips are going to be handed out in the next six months, and by the way, you’re going to explain to your constituency that they’re getting laid off because the government has got a so called deficit. But we can spend $20 million on a piece of infrastructure that has not met the tests as to what the urgency or emergency is, as to why that has more of a priority over schools, people’s layoff pink slips, and exactly where this government is going.
I ask for Members’ support in realizing that by making this decision.… It’s a $20 million investment that right now I think could be invested in better ways, also realizing that this government is going in the wrong direction when it comes to supporting our private sector. So with that, Mr. Chair, thank you.
Thank you, Mr. Krutko. To the motion, Ms. Groenewegen.
Thank you, Mr. Chairman. To the motion. I’ll be supporting this motion. I think that this particular project, coming up the way it did with no substantiation, no compelling reason why this needs to be built, is just another example of this government’s pathetic planning.
I guess it pays to be the Premier, you know? I guess $150 million in your home community when other communities are getting nothing…. And you come up with lame reasons to push back capital in other people’s communities in another region. We find pathetic reasons to push it back. But, boy, bring a $21 million project on the books here, and just push it through. No substantiation. No market analysis. And the Premier can sit over there and laugh and talk because, you know, they’ve got the numbers. So it’s just the timing.
You know, nothing’s going to change. There’s going to be no harm. There’s going to be nothing lost by doing due diligence on this project, by doing the analysis, by bringing the information forward in the proper way the Members are asking for. But if this is the kind of high handed way this government wants to operate, if they can get the support of Members, then I guess that’s just the way it is.
I agree with Mr. Krutko. It’s a sad day when we have to go and explain in all of our communities why capital has to be pushed back and there’s nothing going on and people are living as though in Third World countries, in some instances, and schools where you can’t even have proper washrooms. Let’s pile $150 million into Inuvik all at the same time. I mean, the hotels will be overfull; the restaurants will be overfull; the tradespeople will be, you know — talk about our support for local labour. You can be guaranteed to build all of this in Inuvik at the same we’re going to have to import a whole lot of people from other places in order to get this work done.
There’s nothing lost in deferring it until we get the proper…. Why this project? Why ram it through? You know, the government’s lack of planning should not constitute an emergency on our part. It’s no emergency for me. Anyway, it’s a sad day in the Northwest Territories, like Mr. Krutko said, when we’re laying people off because we’ve got no money, but we’re going to put a high priority on some people because the office building they’re in is old. I still haven’t heard any safety or health issues being raised on this particular thing.
You know, it’s a sad day when we turn teachers out of the Northwest Territories because they’ve got no place to live. Oh, heaven forbid that we should spend a little bit of money building some staff housing, because we got out of staff housing. That was the wisdom of the day. We got out of staff housing, and now we’ve got small communities struggling with keeping nurses and keeping teachers in their communities, because this government can’t see its way clear to spend a few million dollars to build some housing to keep professionals in the small communities. But we’ve got $21 million for an office building in Inuvik that wasn’t on the books, that just sprang on to the capital plan, a pathetic example of planning by this government. They should do their homework. They should go back to the drawing board. They should do their analysis. They should come here with their compelling arguments, and they should substantiate this to us.
I cannot support this with this lack of information. If we’re going to do our capital planning this way, if this is how we’re going to allocate capital funds, well, I guess it just goes to the quality of the government that we actually have, which is getting pretty low. Thank you.
Thank you, Mrs. Groenewegen. To the motion, Mr. Bromley.
Thank you, Mr. Chair. I’ve appreciated the considerable debate we’ve had on this project. I’ve been collecting points and am still equivocal on this, and I’ll be listening closely for the rest of the debate. I am convinced that there’s value in doing this building the way it’s proposed. The $39 million in premium that we’d save is substantial, and I’m very, very cognizant of the need for infrastructure dollars. This is almost $2 million a year. There’s so much that we could do with that money.
There’s also the vacancy issue and market study business. Again, I’m not convinced that 7 per cent or 7,000 square foot vacancy is actually an acceptable level of vacancy and one which is surely planned for by investors and developers. But to balance that, the study hasn’t been done. That’s sort of the best estimate of one of our Members who made some phone calls. I have to support the idea of doing a market assessment in communities where it is such an incredibly big deal to have infrastructure like this, which is most of our communities, that some sort of a market assessment be done.
I also am cognizant that the government has assured me that they will substantially keep the retail space, the commercial space that they’re now occupying, with the exception of the Perry Building and our own two 45 year old buildings. That’s significant to me. Again, it helps persuade me that the market impact will be modest.
I’m also expecting that we will continue to be an active and significant tenant in the community, as I think we have been since the inception of the community. So I’m again assured on that front.
But the dilemma comes in comparing dollars committed to this project versus where they could go. I think it’s been mentioned already that this project seems to have appeared without going through the normal planning process which we typically are referred to when we bring things up. We’re to some extent being told we should do it because we planned, that there’s money identified for it and the planning has been done to actually build this. Again, balancing that is how much. We know that we have a huge amount of carry-over. It’s been 25, 45, 60 and now 80 or 90 per cent in the last four years carry-over, and Inuvik already clearly has tens of millions of dollars of infrastructure demanding attention and people and skills to the extent that will this just become another carry-over?
I guess, finally, I can’t help commenting about the other opportunities we have or might have had to spend these dollars had some rigour, and I’m not sure what, been brought to the process of planning. I just can’t believe, for example, that the Hay River Diamond Jenness school, with all we know about that, has not been properly planned for at this point in time.
So that’s where I’m at. It’s still a question in my mind, and I’ll be listening to any further comments and making my decision.
Thank you, Mr. Bromley. To the motion, Mr. Ramsay.
Thank you, Mr. Chairman. I just want to start off by saying I do support it, and I can see the business case. I’m a former businessman. I understand saving money and the fact that if we build a building, we could potentially save up to $2 million a year, and I think it’s about $39 million over the course of it.
However, it’s a huge building, and I question the size of it. At over 40,000 square feet that’s an immense building. If you put that into a community the size of Inuvik, what does that do to the local market? I think it’s incumbent upon the government to do that type of study, a market study, before we rush into building what I would deem an excessive sized building. Over 40,000 square feet: that is a big building. I’m not sure how big Wal-Mart is, but I think Wal-Mart is somewhere around 55,000 square feet, the entire building that Wal-Mart is in. It’s a big building. We’re talking in excess of 40,000 square feet.
The planning on this and the urgency is something I also question. I’m not sure how exactly this ended up in the capital plan just like that when there are, as other Members have said, competing priorities out there for capital dollars. You can point firstly to schools. We’ve talked about Diamond Jenness in Hay River, Mangilaluk School in Tuktoyaktuk, Sissons School here in Yellowknife. There are a number of schools that urgently need some funding. When a capital project such as an office building jumps to the top of the list, then Members are going to have some questions about that.
Like I said, I support an office building in Inuvik if it makes economic sense, if it’s going to save the government money. With this motion that’s here today, I think all it basically is trying to achieve is asking the government to prove to us that it’s a worthwhile capital project. I don’t think it’s asking anything more. I don’t think it’s a slight on Inuvik. I don’t think it’s any of that. I think all we’re looking for is this market disruption analysis to be done and some technical information that we’re asking for, evaluations on the government owned buildings in Inuvik. That’s all we’re asking for. At that moment in time — I’ll say it right now — I’ll be able to say: yes, I think this is a building that I can put my stamp of approval on, and I think it’s something the government should go ahead with. But, again, given the fact that it just fell out of the sky and it’s a huge building, I think we have to do our due diligence on it. That’s why I’m going to support the committee motion.
Again, I’m not closing the door to supporting this building, because I think that if the numbers are correct at $39 million, it’s something we should be taking a good hard look at, but let’s do our homework before we get there.
Thank you, Mr. Ramsay. To the motion, Mr. Menicoche.
Thank you very much, Mr. Chairman. I, too, will be supporting this motion. When it first came forward and we were first made aware of this building, we got together in the spring. We had just got elected about that time. We were just getting back up to speed and getting our briefings. Being a former Member from the 15th Assembly, that’s what I saw too. Here’s a huge project plopped ahead of everybody else. We’d never seen it before in the previous Assembly.
There’s something to be said about our capital planning process, and that’s exactly it. There’s a plan and there’s a process. If we just show up and there’s a building there and nobody knows what it’s there for or how it got to be there…. I know from experience; for instance, the Nahanni Butte gymnasium. I fought long and hard trying to get it on the capital plan. It was a two or three year fight to get it on the capital plan. That’s hard work. I had to get Members engaged and support from outside the House to get this implemented. There are several other projects that I’m probably failing to mention that took the same kind of lobbying effort to get them on the capital plan, vetted through committee systems, vetted in government, statements in the House, oral question period — just the whole gamut of effort that it takes to get something on the capital plan. Yet we show up and here’s this huge project that nobody even heard of that gets on the capital plan effortlessly. That’s my biggest disappointment with that project. We’ve got a process in place, and it wasn’t used.
The government announced their intention to establish an office building. It’s up to them to provide a detailed proposal and the best way to implement the new 37,000 square foot building. I think it was Mrs. Groenewegen who said that to her it failed the test — and to me. The process fails the scrutiny that Members on this side of the House deserve and should get. I’ve failed to be convinced as well. We want to improve our communities and we want to improve our region, but at the same time, it is due process that must be followed. I’m a staunch believer in process, and that’s why we got them in place. It’s to prevent instances like that.
Typically, something that just shows up on the books is because it is an emergency as well. You know, I spoke about that earlier in the day. There is an emergency; here is the case; we must do this today. That’s not even the case. That hasn’t even been presented, not one iota of that, probably because there’s no emergency for office space.
At the same time, you know, governments have got to do their homework. They’ve got to provide us as much detail as committee demands and wants. It’s frustrating maybe for government, but it’s frustrating for us as well, because we are overseers of the public purse, and we want to make sure that we get the best value for the money
This government is halfway there. They’re saying we should own it. The government’s own building makes the best sense, and I agree, but should we go with it today? I’m not convinced, Mr. Chairman. Thank you very much.
Thank you, Mr. Menicoche. To the motion, Mr. Beaulieu.
Thank you, Mr. Chairman. I’m listening to both sides of the discussion here today. I think that I’m surprised that there was no analysis done on what this could do to the market. If all of the office space currently in the communities is being utilized and this does not quit utilizing any of that office space, then I could see why this could be overlooked by government to not consider doing a market disruption analysis. However, I still feel that there is some sort of market analysis that has to be done, whether we script it as a market disruption analysis or not, some form of an analysis that indicates that this has got long term implications to the potential for other private enterprise to provide office space.
I recognize that some of the MLAs indicated earlier that, yes, owned office space is the best, most economical way to go here. I think that is a possibility when you compare and you know what you’re renting and what you own. We’re high in Inuvik on the rent/lease side of things, I know. That’s another compelling argument for the government to build this office space. I guess it would be such a simple process to be able to do some sort of a market analysis on exactly what the impact of this office space would be, and I’m regretful that that wasn’t done.
In other areas, as I thought about this, I would support a motion that reduced the amount of money going into this building, because I do feel that some of the school projects are a priority. I’ve never seen Mangilaluk School in Mr. Jacobson’s riding. However, I have seen Diamond Jenness many, many times. I’m aware that that building is not a safety issue and that the building is not going to come crashing down on the kids. I recognize that, but it was kind of an interesting tour that we took of that school.
At one point the principal was talking about the difficulty in managing the school because of the configuration. Considering that it was the last government, when I was in a different role, when I had an opportunity to tour the school with some MLAs and some Ministers, I thought that in view of that school and everything there, it was a lot further ahead than they are. I see that there has been a technical evaluation done on the school, which I believe technically would put that ahead of this office, as far as moving forward into the capital plan goes. At the same time, I feel that the Ministers have made a really strong case for having some of the GNWT employees, I guess….
You know, our business is based on how well our staff can perform, and the performance of the staff in Inuvik, considering it is a regional centre, is probably pretty important to the whole region. People who are working there need to have good morale, good office space, a good place to work, and to feel like going to work in the morning and sitting in a nice comfortable office. I guess GNWT employees in Inuvik deserve that as well. So I can’t support the deletion of all of the money out of this space.
However, I would like to caution the government that in the future, if this type of project appears in front of us for debate again, they should have some plans; there should be some good planning. You know, when something’s this important and we are trying to move this much money — when in my own riding of Tu Nedhe I should be one person who would stand up and want to not support any of this — at the same time, you know, as I indicated earlier, I feel the government has made a good argument.
I think the planning was lax, so I would suggest that there is still opportunity here to do a market analysis. There are still opportunities to do a little planning about what is going to happen, how this is going to affect the office rental sector in Inuvik for the long term. So I hope the government would still do that evaluation, and maybe they may have to.
As far as the other school projects that were important under the EC&E section of the budget, I think some of those projects should proceed, and if the government is not going to spend this money…. We have in the past, as the GNWT, as the government as a whole, had a lot of carry-over. We have carried over a substantial chunk of money. I think everybody here knows how much money was carried over. They changed the system a little bit to reduce the carry-over, but there’s still a substantial carry-over. So I would suggest that it’s going to be difficult to spend all this money, and I hope they take a second look at the schools at the end of day when the capital plan is approved by the House.
Thank you Mr. Beaulieu. To the motion, Mr. Jacobson.
Mr. Chair, for myself I can’t support the deletion of this project. Numerous other projects are just as or far more important, like the Diamond Jenness school. Seeing the book that my colleague Mrs. Groenewegen has brought forward and showed me, but right now…. I said earlier today when I first spoke: I do support the building; I can’t support the deletion. If it was a deferral I would, but I can’t support that. So I’m just letting my colleagues know. I heard the arguments on both sides. I can’t support the deletion, but if it was a deferral, I would, just because I know the buildings that they’re speaking of in Inuvik. They are in so-so shape. But for myself right now, I’ll be more than likely abstaining from the vote.
Thank you, Mr. Jacobson. Next on my list, to the motion, Minister Michael McLeod.
Thank you, Mr. Chair. I’ll be very brief. I’ve said most of what I had wanted to state on this project. Of course, practising good government, we’ll live with the will of this House.
We do have concerns, though. We probably would not be in this situation if the facility that we call the Perry Building had not developed some serious concerns, some structural defects that would force us to abandon that facility. It’s not really an issue of pathetic planning. It’s just an issue where we really didn’t have and we still don’t have another place to go. There is one other small space that the Member for Mackenzie Delta has mentioned that is vacant. But other than that, there’s really no other place to go.
I certainly appreciate the feedback from the Members regarding the process that this project has taken. I think there is due process that has to be followed, and we expected that we did do that in this case. We have to recognize, though, that we didn’t have the opportunity to put it through the business planning process or any other opportunity to bring it forward until now. It has had some very serious scrutiny from our departments to see what the other options are. We did go out to an RFP. There was no interest. We advertised it and brought it to the area and to the North, and nobody took us up on that offer. And if they had, we probably would not be in this situation.
We did do cost-benefit analyses of some of the submissions — unsolicited, I should add, submissions — that were made to us, and they did not, from an economic standpoint, make any sense. I can guarantee I would not be able to convince the Members of this House to support those. So we had to look at what we can do.
There is a sense of an emergency. We have health issues in almost all the buildings that we are currently occupying that are government owned, including one of the other buildings that was condemned, which is owned by a southern company, I should add. We do have safety issues with the income support office. It’s going to require at least a half a million dollar upgrade if we don’t have this office moved to a better facility.
The Finance Minister has mentioned a number of times that it’s recommended that we have a balanced portfolio. Probably Inuvik is one of the most lopsided investment portfolios we have, because almost all of our office space is leased. Only 7 per cent is what the government owns. Even if we went ahead with this project, which would be our own project, the portfolio would still be 62 per cent leased, which is more in line with what the industry best practices recommend.
I also appreciate the fact that Members want more studies. Of course, the previous government had wanted fewer studies. That’s something that we have to, I guess, start doing more of.
I certainly appreciate the Members’ comments that we need to own the building. I think that’s a very important acknowledgement. Many Members have pointed out that this is a very important project, and I agree. We have energy issues with the current facilities. We have old facilities. I don’t know how much longer we can accommodate them.
Can we move it back a year? I supposed we could. But, Mr. Chairman, I’m pretty certain that we will not be able to come back with the same dollar figures. I would expect those dollars are going to increase. We’ve seen it almost with every other project. Every project that’s been deferred, carried over, we’ve seen huge increases in the costs. Those are some of the things that we have to acknowledge.
Mr. Chairman, when the Perry Building was no longer available to us, that was 25,000 square feet that we lost, and this facility is 37,000 square feet, which will include the offices that were in the Perry Building plus a couple more. I thought we gave comfort to all the proponents that we would continue to lease all the current leases we had with the different developers in Inuvik, and they seemed to be okay with that message, but I’m hearing different now.
Mr. Chairman, we will live with the will of this House, and we will do whatever the motion decides of us.
Thank you, Minister McLeod. To the motion, Ms. Bisaro.
Thank you, Mr. Chair. I want to make a number of comments relative to this motion.
Unlike other Members, I do feel that we’ve received adequate substantiation for this project. From what I hear periodically, this project has been around for quite some time, although it hasn’t been in place as a capital project. But there’s been a need for office space in Inuvik for longer than the last year and a half, from what I’m given to understand.
One of the strong factors for me is that if we build the building ourselves, we will save, give or take, $38 million over the 20 year life of this particular building. I’ve heard Members say that we’re throwing money away at this building by spending $20 million on it. Well, I’d have to counter with we’re throwing $38 million away if we lease the building. I have a real concern that if we lease the building, we’re…. You know, in response to constituents, how do I explain that I okayed an extra $38 million in cost?
I do feel that the market disruption study is something that should have been done, albeit the sort of informal study that was done indicated that there was very little space available. But I think it probably would be a good idea for us to put as standard practice that anytime we build a building in any community, we do a market disruption survey or a market disruption study. I think it’s something that should be part of the substantiation of any project.
The other thing that I think would assist Members…. I mentioned it briefly the other day, but I want to mention it again. I think that in order for us to sort of quantify projects and to fit them into a neat little box within our heads, it would really assist if projects come forward with a priority on them. I noticed earlier that small capital projects, I think it was, are prioritized from 1 to 5, and the same thing needs to be done for large projects. If we’re looking at a project that is priority 1 and we’re comparing it to a project that’s been identified as priority 2, that certainly gives us some indication that the two projects have been considered, and one is more important than the other.
I also, at the risk of being called naïve or foolish or whatever, hear the Minister of Finance and the Minister of Public Works when they state that they will, as much as possible, move the Hay River project forward earlier than what’s in here. That may be at my peril. Don’t make me look bad, you guys.
The bottom line for me is at this point: I can’t support the deletion of this project. I think it’s necessary. I think the Hay River project is also necessary, and I’m really disappointed that it was moved back. I certainly would be open to the government coming forward later on in 2009 and saying: Hay River is ready to go; give us some money. I’d be all for that. With that, that’s all I have, Mr. Chair.
Thank you, Ms. Bisaro. To the motion, Mr. Hawkins.
Thank you, Mr. Chairman. I put a lot of thought behind this. You know, we struggle with the context of supporting our colleagues and going our own way. It’s always quite impressive when we work hard together and come to a common front. I guess I’m struggling with this one because of the issue of where we get the best value for dollars.
I’m not sure, if we lease, if we get the best value per dollar. I like the proposal presented, as one of my colleagues, Mr. Krutko, had pointed out, where if the Gwich’in build a building and lease it back to the GNWT, we get it for a dollar at the end. That’s typically the only type of project I support that we lease, where we end up with the project in the end. I’m not too comfortable with what I would sometimes define as leases for life, because I don’t think that’s good value in communities.
When we get to a market community, the challenge then becomes whether the market is responding to the government’s needs. In this particular case I think we’re out there in the public enough spending dollars.
I also ask myself, in a time when money’s tight, if it costs us money to do something, is it good value for money too? In this particular case sometimes the hard choice is spending money we may be short on, but it’s the best choice over the long haul. As I often cite, bread and butter economics is sort of my principle of how I like to do business. We may not be flush with cash, but it’s the right choice by building this building over the long haul.
I want to compliment the work brought forward by my colleagues Mr. Krutko and Mrs. Groenewegen, who’ve worked hard on this project to educate Members, as well as the staff who worked hard to give us a perspective to think about. I don’t vote against their motion because I want to vote against their motion; I’m voting because I think the present value for this project is in its current form.
Did it run the gauntlet like the rest of them? Probably not, but sometimes we have to respond and make decisions. It’s easier to sit here sometimes and go neg, as they say, on government by saying, “You didn’t listen; you didn’t talk to us enough,” or those types of things. Sometimes a challenging environment in politics is to make the right decision under certain expectation of criticism and scrutiny, yet still make the right decision. I think the right decision here was to make this one, and the decision was to go ahead with this building. I know it’s not easy to run the gauntlet, as this was maybe a short planning session, not through the business plans as it normally would be. The right choice in my mind is: yes, we’re tight for cash, but this is probably the best process.
I can’t speak to my personal experience with the health issues of some of our assets. I don’t know if I would make sure people knew about that too much, if that was the case. I would quietly try to fix that. That said, we have to be responsible with our assets, and if our assets aren’t living up to a reasonable standard, I would hope that we would proceed safely for employees.
Mr. Chair, I really have a difficult time abstaining. I thought about that all day today, actually, about should I abstain. To my knowledge, in starting my ninth year in politics, I think I’ve only abstained once. I’d like to be able to finish my political career, whenever that comes, by saying I only did abstain once. I don’t really like it; I don’t like the use of it. So in this particular case, I’ll be voting against the motion, although I understand how my colleagues feel.
Thank you, Mr. Hawkins. To the motion, Mr. Yakeleya.
Just before the question, Mr. Chair, I guess I’m looking at, in terms of this motion here, the fairness. There are some processes, certain ways of getting to the capital. You have to wait for the usual process of going through a business plan and getting the support. There are several projects that seem to have gone out of the usual process to get into the capital budget. I don’t mind. That’s the way things are dealt with in here. We have certain projects in Yellowknife here that got on the books, and they’re spending money here and certainly in the Inuvik region also.
I’ve been to Inuvik; I’ve see MACA’s housing, in terms of their office facility. I’ve seen the building that they work in. I’ve seen some of the employees that had to work under those conditions. I’ve also seen where assets in our small communities are pretty deplorable in terms of safety standards, where they have to live up to it. They have to grin and bear it, say, “Okay; we’ve got no money,” in terms of when you want to do things. Then they scratch their heads and wonder: well, how can we do things in other regions?
For myself there are still a lot of questions I want to think about in terms of the market, in terms of the community. Is this the right thing that the government should go into, protecting our assets? Or should we protect only certain assets within the government: schools, health centres, things like that? Should we continue that or continue working with the different governments in our regions, different community organizations in our cities and towns, and say, “We want to go into a partnership with you. We don’t have the assets. We don’t have the money. Can you do something with us?” Will we take the risk of building a building and owning it? Then we’d have to look after it.
So for myself I certainly see a need for the building, but I’m not too sure or convinced it is the amount that we need to build in Inuvik. There are a few projects that have come to Yellowknife, and I kind of scratched my head and said: how did that get here? How come we’re pouring millions and millions into downtown Yellowknife when we’re crying for programs and proper offices and health centres in our region, which government should do for our people?
I’m really perplexed in terms of how things move. I do see a need for the communities to take part and be a true partner with this government. So this is not enough information in this short time for me to go forward with the motion. I’m going to abstain on this until I can ask more questions here. I certainly am not happy with what I am hearing from the government in terms of how this came to be, but I also see a need for it. I see people in there. I see a need for it, but I’m not happy with your responses and your answers. The same thing has happened in my region. You have really good answers for us in our region, but your department here in Inuvik…. You have good answers too, but I’m not happy with them.
Let me tell you, I do see a need in Inuvik for this. I do. I’ve been there and I’ve seen it, but I think we’ve got a long way to move in terms of working out what our priorities are. So I’m going to abstain, Mr. Chair, on this motion. I’m not comfortable enough to either go for it or against it.
Thank you, Mr. Yakeleya. To the motion.
Question.
Question is being called. I will now call upon Mr. Krutko to conclude debate on the motion.
Thank you, Mr. Chair. Thank you, colleagues, and I thank the Minister for his comments. Again, we’re spending $20 million, but I believe we’re going to be coming back here in the next short while wondering where the money went. I have to state that due process was not followed in this case. From the Minister’s comments today he doesn’t know what the terms of the leases are in the Inuvik region. Are they month to month? Are they one year? Are they five years? Are they ten year leases? Without that information, you can’t tell me that the government will remain in those facilities in the near future. Without having a plan by way of a market disruption plan to understand what the implications of this will be over the next five, ten or 20 years…. Due diligence wasn’t done in that context.
I think it is important that this government realizes, as we hear time and time again in this House, that we do not have the dollars or the resources to do what we’d like. I know, for Members who come from small communities, we see the situation in our facilities where you walk into a principal’s office and there are buckets on the floor or pots throughout the school because of leaking roofs. Mould is now appearing in our public facilities. Yet we’re going ahead with a $20 million and in some cases it looks like a $25 million project, if you look at the numbers.
I think it’s important to realize that as Members of this Legislature we are responsible to protect the public purse. I know that it’s important to realize that we do need to make some tough decisions. We also have to realize that there are going to be implications to this decision when we’ll have to consider our deficit elimination process in the next couple months and in the years ahead. I believe that we have to do justice to the people of the Northwest Territories when we’re spending $20 million on this type of capital, realizing we’re not in a stable market in regard to what’s going on with the economy and, more importantly, what’s going on in Canada and the rest of the world. I don’t think we’re immune to that.
We can sit in here and talk about outhouses in downtown Yellowknife, but we don’t have the resources to do it. I think we have these challenges where we have such a dismal situation with regard to the health and well-being of our residents that we are now seeing homelessness on our streets, people having to go to food banks. I think that’s the reality of the day that we’re seeing here in the Northwest Territories. It wasn’t that way a number of years ago.
I think it’s important to realize that by spending money foolishly by way of this project, it will have a major implication on this project. All this motion asks for is that the government step back, do the market disruption analysis, get back to committee in January and let us know what your findings are.
Also, ensure that the government does a technical evaluation of what the facilities are that our government owns at the present time, find out what the status is of those facilities, and do a technical evaluation and report back to standing committee. That’s all this motion asks for: that the government take the time and do due diligence in regard to its responsibility not only to this Legislature but also to the people of the Northwest Territories, who we are solely responsible to.
I’d like to ask the Members to consider this motion, and I’d ask for a recorded vote.
Thank you, Mr. Krutko. The Member has requested a recorded vote. All those in favour, please stand.
Mr. Krutko, Mr. Menicoche, Mr. Ramsay, Mrs. Groenewegen.
All those opposed, please stand.
Mr. Hawkins, Mr. Lafferty, Ms. Lee, Mr. Miltenberger, Mr. Roland, Mr. Michael McLeod, Mr. Robert McLeod, Mr. Bob McLeod.
All those abstaining.
Mr. Bromley, Mr. Beaulieu, Mr. Jacobson, Ms. Bisaro, Mr. Yakeleya.
The results of the recorded vote on the motion are four in favour, eight opposed and five abstentions. The motion is defeated.
Committee motion defeated.
We’re on page 4-4, Public Works and Services, Activity Summary, Asset Management, Infrastructure Investment Summary, Total Infrastructure Investment Summary. Mr. Krutko.
I move to report progress.
There’s a motion on the floor to report progress. The motion is in order and is not debateable.
Motion defeated.
Okay. So we’re back on page 4-4, Public Works and Services, Activity Summary, Asset Management, Infrastructure Investment Summary. Mr. Krutko.
Thank you, Mr. Chairman. The Minister, earlier on when I asked a question in regard to leases in Inuvik, mentioned that he didn’t have it. Does he have it at the present time? I think he’s got enough staff by way of Public Works and Services that he should be able to compile that information. He had a couple of hours. I’d like to ask the Minister if that information has been brought forward. I think this government cannot knowingly or unknowingly know what the implication of this decision is until you know what the terms of those leases are for the government in regard to the Inuvik project. I’d like to ask: exactly what are the terms of the leases? Do you have month to month leases? Is it one year, two year, or three year terms in regard to leases in Inuvik for the government offices?
Thank you, Mr. Krutko. Minister Miltenberger.
