Thank you, Mr. Speaker. I’d like to table the “Economic Opportunities Implementation Plan.”
Thank you, Mr. Ramsay. The Minister of the Power Corporation, Mr. Miltenberger.
Mr. Speaker, I wish to table the following two documents, entitled “Northwest Territories Power Corporation – Empowering Communities, 2014 Annual Report;” and “Northwest Territories Hydro Corporation Annual Report, 2014.”
I’d like to call Committee of the Whole to order. The Speaker has listed some of the things that are before Committee of the Whole today. What is the wish of committee? Ms. Bisaro.
Thank you, Madam. Chair. We would like to deal with Tabled Document 115-17(5), Northwest Territories Capital Estimates 2015-2016.
Thank you, Ms. Bisaro. Does committee agree?
Agreed.
Thank you, committee. We will commence after a brief break.
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I will call committee back to order. We are dealing with Tabled Document 115-17(5), and we are going to start off with the Department of Finance. I would like to ask the Minister of Finance if he would like to bring witnesses into the Chamber.
Yes, Madam Chair.
Thank you. Does committee agree?
Agreed.
Agreed, thank you. I will ask the Sergeant-at-Arms to escort witnesses to the table.
For the record, Mr. Miltenberger, could you please introduce your witness.
Thank you, Madam Chair. I have with me the deputy minister of Finance, Mr. Mike Aumond. Thank you.
Thank you. We’ve made general comments. Could I direct Members’ attention to page 27, which we will stand down initially. Actually, we’ll go first to general comments. General comments on the Department of Finance. Any general comments? Mr. Yakeleya.
Just a quick comment, Madam Chair. The Department of Finance – I’ll just look at my notes here – has indicated there are ways we can stop the leakage of the Northwest Territories economy with regards to the policies and our programs.
Is there some movement with regard to how we put some of the plugs in the holes that we have with our government, so we can keep the most money as possible from leaving the Northwest Territories? Thank you.
Thank you, Mr. Yakeleya. Minister Miltenberger.
Thank you, Madam Chair. We’ve initiated discussions through the initiative of trying to increase the population by 2,000 in the next five years with industry, the mines, in particular the Chamber of Mines plus the Chamber of Commerce, to look at how we minimize the fly-in/fly-out population and look at what opportunities are there as they come up with an expedited immigrant application process, which is going to come into play here in the new year.
We’ve also done a lot of work internally as a department to move to fill our very new vacancies we have both inside and outside of Yellowknife. We’re going to be having a major Energy Charrette that’s going to look seriously at generation of electricity, energy and how we lower the costs of what people pay for power.
In a whole host of areas, we are at work on dealing with the issue the Member has referenced. Thank you.
Thanks to the Minister. We certainly have some challenges as an Assembly with attracting the numbers of people we want to have live in the Northwest Territories, considering the environmental scan of the whole government, the economic conditions, the employment, the cost of living in the North and a whole bunch of other social factors that come into play here. I read the document and the Northwest Territories certainly has its work cut out for us. So I guess we’re trying to find that balance with attracting new investment into the North and at the same time sustaining our pristine water and land, and something’s got to give here in regard to meeting our objectives of creating more wealth and weaning off federal government dependency. That will be awhile, but 80 to 90 percent of our dependency is still on the federal government. That won’t happen in this Assembly. So how do we create that freedom, I guess they call it. We could have that freedom from the federal government. I’m not too sure that will be coming very soon.
So this is what I’m looking at, because right now we’re at the whim and beck and call of the federal government in regard to the type of lifestyle we live here in the North because they’re the ones that are holding the strings to our economics and basically giving us a little bit of leeway through devolution. The territorial funding formula is actually decreasing because people are leaving the Northwest Territories. Yet, at the same time, we want to attract X number of people to live in the Northwest Territories and we’re just dealing right now with the high cost of living here. It’s something that’s been on all the Members’ minds at some point or another as to how do we create a stable Northwest Territories, meet our objectives, meet the high demands of our small communities, communities that do not have some of the essential services that should be in our communities, but because of the finances and the situation we’re in it doesn’t allow us to do so.
We’re doing our best. The Minister has come back with a report on the sustainability and the strength of how we handle our money with the triple A ratings that we are given. That’s a credit to the Minister and his staff for maintaining that. It sort of gives confidence to the investment world and the economic world that the Northwest Territories is fiscally sound and it’s on its way to handling its debt, it’s revenue expenditure.
On this side of the table we know that we’re always asking for more, yet we are told that we have to live within our means and live with less. We’re going to do more, but live with less. That’s kind of like being the theme here. I think we’re tired of living with less when we want to do more. We have the means and I guess that’s something that I’ve been thinking about for a while.
So those are my comments for the Department of Finance.
Every Assembly builds off of the work of the previous Assembly, and this is my fifth Assembly, as it is for you, Madam Chair, and this is a theme that is consistent through every government and Assembly I’ve been part of, and here we are today, the circumstance has changed and there are many things that we don’t control, but we are struggling to manage the money, manage our expenditures versus the revenues, the cost of living issues, the population issues, the quality of life issues. If you look at it just at the period of time we’re now in, we tend to get depressed that there’s not enough money, there’s not enough stuff happening, but if you stretch it out over 20 years and you look back and you look at how far we’ve advanced in almost every sector across the territory and all the communities, doesn’t matter if it’s housing or technology or education, the roads, the infrastructure, the amount of jobs, our people that are graduating, we have made progress, but it’s not without its challenges. We’re currently struggling to stabilize our population. We have enormous assets, but people are one that we need more of. So we’ve started the specific initiatives that we think will help us cope with that and we expect that they’ll unfold here over the coming months and into the next government as we deal with some of those broader issues. Thank you.
Thank you, Minister Miltenberger. Next under general comments I have Mr. Nadli.
Thank you, Madam Chair. I just wanted to provide some general comments in terms of what we have before us. It has to be acknowledged that in the NWT we’re very dependent on our natural resources to take us through the hard times, and this far we’ve been very fortunate in terms of the mineral industry playing a very vital role in ensuring that we have operating diamond mines to create employment and business and help the NWT overall in terms of the GDP, our gross domestic product, in terms of trying to at least invigorate the economy in the NWT.
That being said, this government is constrained in terms of the total operating budget of $1.6 billion and there are challenges that remain in the communities. The cost of living is fairly high. At the same time, the social issues remain fairly challenging, as well, and in terms of the cost of living, whom does it really affect. It’s the people that are on fixed incomes. At the same time, maybe it could be elders, seniors that live on fixed incomes. Sometimes it’s people that are disabled. At the same time, it could be single parents that are trying to put food on their tables for their kids.
So it’s a challenge and we have to acknowledge that we have to try to put our best foot forward in terms of meeting the challenges of at least ensuring that the needs of the residents of the NWT are being met and more so in the communities.
In the riding that I serve, and more likely it’s common throughout the NWT, there’s potential, and this government, through its departments, has to ensure that we work with communities to try to come up with the best possible scenarios of creating opportunities for businesses and, at the same time, trying to invigorate the economy. Such are those of the communities that I serve. I take pride in terms of the geographic location of our communities. They’re the first communities that you come across when you drive up north by vehicle, and I’ve always believed the first impression is vitally important. So, the communities that have campgrounds, it’s vital that we have the services, pristine, at the same time, and a very good service that people can identify and at least keep coming back to.
The biggest thing for the riding that I serve, too, is the transportation. This budget, the biggest sector is transportation, the highways. In some respects we’re quite fortunate that we live on the main artery from Enterprise all the way to Kakisa, to Fort Providence and Yellowknife and this summer we experienced what happens if we experience a natural disaster. The fires closed down the highway and the goods of transportation were not being transported to Yellowknife. So there’s a need to perhaps look at contingencies, and with the reality of climate change, these kinds of incidents or natural events could be quite common as we go into the future.
Just generally, there are some projects that are coming down. So that’s good to see, but more could be done. But at the same time, we have to acknowledge that there’s a limited resource in terms of dollars that the government carries. At the same time, there’s a high rate of expectation on what kind of services this kind of government can provide, especially for the communities that it serves and the small communities that matter. It’s essential that we continue to meet the needs of our residents as best we can. Mahsi.
Thank you, Mr. Nadli. Minister Miltenberger.
Thank you, Madam Chair. I appreciate the Member’s comments in his closing statement about working to serve the residents the best we can. As we sit here today with our capital budget, we are of course making the case that SAM cash management module and the SAM strategic sourcing and supplier contract management module will in fact help us do a better job at our part of managing the affairs of the government. Thank you.
Thank you, Minister Miltenberger. General Comments. Mr. Dolynny.
Thank you, Madam Chair. For me, this department here, even though we are talking about capital estimates, this department here is literally the lynchpin for the way we do business in the Northwest Territories. So, again, this department has a broader aspect than just the $200,000 that we have before committee.
Madam Chair, we have been told time and time again, devolution will reduce reliance on federal funding, and yet I kept saying show me the evidence where this occurs, and to this day the department has never been able to show how and by what measure those broad statements we continue to hear on devolution money, how this will affect the budget and, more importantly, the money we have for capital expenditures.
On the token of expenditure growth, according to some of the numbers I have before me, this growth is only a little over 1 percent, where, according to some of the numbers here, we were seeing forced growth at probably just a little over 2 percent.
If we figure in the inflation rate of Canada – the most recent number that we can confirm is just a little over 1.3 percent – really what we are seeing is just a slight reduction of spending in real terms. So I think that what we have here is we have a scaled back budget, when we continue to hear from the government that we need to invest in our infrastructure deficit. I can’t tell you how many times I have seen that term come up, but if we are truly wanting to invest in our infrastructure deficit, have a very funny way of showing that.
What I mean by that is that we are seeing the resurgence of our P3 initiatives. I fear that P3 is going to be the new terminology of the Northwest Territories. In fact, I am really fearful that the term “P3” will represent and be defined as NWT as we move forward, and I am really concerned that the management framework around P3s is going to be very detrimental to our cash management and our debt management in years to come.
Madam Chair, I always like to bring these types of talks back to a point of reference. Now, the point of reference is always the public accounts, the Canadian Institute of Chartered Accountants. It was stated, “A Government’s financial health should be measured in terms of its sustainability, flexibility and vulnerability.” Those are three very large and key aspects. I ask this committee, and I ask this department and this Minister, how well are we dealing on those three categories, on sustainability, flexibility and vulnerability? I think these measures are clearly indicative of we are in trouble. I want to stress that. I think we are in bigger trouble than we are led to believe. GNWT continues to wane this vulnerability of trouble and claim that we have this under control. They’ll throw a lot of pie charts and graphs, and they will talk about how great we are doing: we are third best in Canada here in debt to equity and debt to GDP. These are great by design, but as I said in my Member’s statement the other day, by whose design? Because these clearly aren’t the same definitions and measurables that I am seeing across Canada. These are clearly not the same definitions and variables that are used by organizations like the Fraser Institute. We are not in the best matrix of Canada in terms of performance, and somehow we are leaning in that direction. I don’t want to cry wolf, Madam Chair. I’m using statistical, actual numbers to say we are in trouble.
While we’ve heard in terms of how to deal with our shortfall in revenues, let’s increase the population by 2,000 by 2019, well, how are we doing with that Madam Chair? How are we doing with that? We have decreased in the last year by 218 people, but more importantly, what have we lost? The other number that we don’t talk about, in terms of loss during that period, is how many people we have lost in the workforce during that same period. We lost a net 718 people. That is Stats Canada and these are our own stats. So our in-migration/out-migration has dropped even more than anticipated, and these are the people that are paying taxes. These are our men and women who are applying for jobs we have lost. There has been a huge brain drain, and I am greatly concerned that no one wants to talk about our out-migration rate. We are looking at the overpopulation, which is fine because there is a taxation number attached to that and I can clearly understand that, but I am concerned that really our only true tactic in dealing with what I call a scaled back budget, literally orchestrated and hand smithed by the Department of Finance with the departments is scaled back.
When you look at the finances keen on seeing investments spent in the public infrastructure, you know it’s disheartening when you look at this budget as a whole. There is no new increase in community investment and capital. That number is stuck at $28 million, if you look at this budget. So, truly, if you are trying to tell the people that we want to invest in infrastructure in our communities, my god, Madam Chair, we don’t hear that often enough in this House. Every community member here speaks about their needs, and here is an opportunity for this Cabinet, this government, this department, this Minister to address the shortfalls of communities. This is stuck at $28 million. So, clearly, I think that this is disheartening to see, again they’re talking out one side of their mouth and doing something else completely opposite.
But moreover, Madam Chair, and I will go to my last point, what are the guiding principles of this department? What are the guiding principles of this Minister when it comes to our fiscal policy? It has to be evidence based. I think we can all agree on that; it has to be evidence based. There has to be a framework on how this government and this department and Minister govern themselves and conduct themselves with our budget and with our investment.
What do they use is a Macroeconomic Policy Framework. That is their guiding light. Well, that framework is over seven years old. This was developed well before devolution and the recession of 2008. So, I think we would all agree, a lot has changed since devolution. I think a lot will agree that a lot has changed since 2008 when it comes to global finances and our finances in general. If we are being told that this is what is going to be the evidence base for growing and diversifying our economy in infrastructure purchasing, I’m concerned.
How can you do measurable investments, strategic investments with public dollars, with tax dollars, with a policy that is over seven years old? How do you effectively measure initiatives with such an irrelevant policy framework?
I will have, obviously, details as we continue this venture, and again, I don’t want to sound negative completely in my discourse, but I’m concerned, and that should be loud and clear and being resonated to the department and to the Minister. I am concerned, and until I hear otherwise, you will continue to hear me indicate where I think we need to do better, and I will continue to do my job as a Regular Member to show that this department, this government is in trouble. Thank you, Madam Chair.
Thank you, Mr. Dolynny. Minister Miltenberger.
Thank you, Madam Chair. I’ll agree with the Member; he’s not totally negative. But the reality is, we are going into our fourth capital plan. We are going to be, in a few months, back before the Assembly with our final O and M budget. A lot of the concerns here today, even though we’re here to talk capital, are much broader, focused on the programs and services.
The government runs… It’s a business, a complex business, on the clear guidelines and principles that govern all public government institutions: accounting, reporting and public accounts and transparency. We have a very intense system with the MLAs that lay out the priorities. We have the debates about the budgets; we have approved three. At every budget address, I will concur with the Member, we have pointed out the fact that our O and M pressures are outstripping our ability to keep funding them.
We’ve held firm in terms of not putting any new money that we would get from resource revenue sharing in the programs and services because those revenues are very volatile. We need to beef up our debt repayment, the Heritage Fund and our infrastructure, and we already spend $1.6 billion out of $1.8 billion on programs and services. No matter how you want to look at it, the reality is, in spite of those challenges, the finances of this government pass muster from the Auditor General, from the finance people, from the credit rating agencies, from this House where we pass our budgets. Yes, the day is coming again and continues to come, but we’re going to, as we look at controlling our revenues and balancing those with our expenditures, the upward pressure on our O and M costs are absolutely consistently there, unrelenting and continue to drive a lot of our thinking.
As we lay out in our fiscal strategy, and we’ve said it again this time, and we’ve said it all my seven years now as Finance Minister, that this is a path that has a long-term trajectory that’s not sustainable unless we manage to have more control over our program spending. I agree with the Member on that. But there is very significant demand in the Northwest Territories and in this House, on the one hand, to manage our money and to do all these good things and grow the population, spend more money but manage your money, and be all things to all people, and it’s a balancing act that I think, for the most part, we as a government and a Legislature have managed to do.
A lot of things have changed since 2008, 2007, and we have yet to recover from that dramatic economic shock, and we’re working on that. I don’t recollect devolution ever being held out as a financial panacea where all of a sudden we’d have no more fiscal problems. What it was is we would finally have control over decision-making on things that matter to us, that we would take over some of the functions of government, which we’ve done, and that we would take the amount of resource revenues, which we’ve always known were modest, and we would put those to use. I would suggest to you that there have been those benefits, because without that resource revenue sharing, we wouldn’t have any very significant investments in our Heritage Fund, for example, and we will put the money to use into our capital plan, $315 million for the year coming, which is not an unsubstantial amount of money of anybody’s measure.
We are managing to do an enormous amount of work. We’re doing the Tuk-Inuvik highway. We’re going to do the fibre optic link. We’re going to do the Stanton Hospital, $315 million. Yes, there are challenges to that, but as a government, what is our responsibility? Is it to invest in infrastructure or not? Is it to invest in critical economic infrastructure? Critical social infrastructure? Do we take on a mortgage of sort, a manageable mortgage to do that? There’s nobody in this room that I don’t think has ever managed to make it through their life without taking on a mortgage for critical big cost items. It’s how we’re supposed to do this business. It’s the only way we can.
I appreciate the stern advice and concern from the Member, and we’ll continue to do the work that we need to make sure that we can maintain our Aa1 credit rating and that we have the money we need to leave the coffers for the 18th Assembly in a situation where they have some flexibility.
Thank you, Minister Miltenberger. General comments. Mr. Bromley.
Thank you, Madam Chair. I don’t disagree with many of the concerns that are being brought up, but I am having a hard time shoe horning such comments into a discussion of the capital budget with the Department of Finance given that we will have these discussions in another forum at another time, and we can’t make any decisions here. Although I do have to reply to a couple of things that I heard the Minister say.
MLAs that lay out the priorities, certainly MLAs don’t lay out the priorities during this government. Albeit, it’s probably because this side of the House has chosen not to use their power.
This is the fourth year budget and the significance to that is we’re leaving some pretty horrible stuff for the 18th Assembly to try and deal with. The Minister said controlling our revenues. I’m not sure he meant to say that. We certainly don’t control our revenues. We do very little to increase our revenues, in fact, despite Members pointing out opportunities there. The Minister, however, does, when all is said and done, admit that it is not sustainable, and that’s, I think, where the concerns are coming from. But like they say, that’s another discussion.
Getting to the Department of Finance capital budget here, I see our estimate last year was $450,000 and the revised estimates, $1.031 million. That sounds like quite a divergence at 115 percent, and who knows if it’s over yet. Then a major reduction to $210,000 this year. Maybe I can just get an explanation of what’s going on there.
Thank you, Mr. Bromley. Minister Miltenberger.
Thank you, Mr. Chair. What we have before us today was we have a very modest capital budget of $210,000. Last year it was higher, but I’ll ask the deputy if he can speak to that in a little more detail. I can provide the detail for committee about the discrepancy from the actuals, the capital estimate to the revised estimates, but I don’t have that detail here with me.
What about the substantial drop from last year to the proposed year here? Do we have any information handy on that?
It reflects that fact that last year we had more capital projects on the go in Finance and this year we have dialed it back to the $210,000 that is here before the House for the two modules that we’ve talked about. I can also get the specifics of last year’s capital, if the Member wishes, and provide that to committee.
That’s all I had. I’ll look forward to that detail. It was the increase from the $450,000 to $1.031 million. A substantial increase there, 115 percent, roughly. I appreciate the Minister’s offer. That’s all I had for general comments.
Thank you, Mr. Bromley. Continuing on with general comments, I have Mrs. Groenewegen.
Thank you, Mr. Chairman. I’ll be very brief. There’s been reference made in these general comments and this discussion to our revenues by way of our transfer payment, which is somewhat based on the population of our territory and our government’s desire to attract more people to live in the Northwest Territories to curb our declining population. My question, I guess, and comment for the Minister is, if you were listening to the debate and discussion amongst us about this at any given time, you would think that every potential job in the Northwest Territories was a Government of the Northwest Territories job. You would think that every job here was a public sector job. You wouldn’t think there was even a private sector here.
Also, when we’re talking about students and education and trying to flag students that are out taking education that might match up with positons or labour market shortages here in the Northwest Territories, again, it seems like all we talk about is Government of the Northwest Territories or public service positions.
I would like to ask the Minister, where does this government’s initiative to grow our population, where does it intersect or interface with the needs of the private sector?
Thank you, Mrs. Groenewegen. Minister Miltenberger.
Thank you, Mr. Chairman. It’s a shared interest. The private sector, as well, is struggling, in many cases, to find staff and people and get people to stay to avoid having fly-in/fly-out, which is why we’ve started this working group with the Chamber of Mines, the Chamber of Commerce and the three diamond mines to talk about what can we do together, how do we work together. Things like going south jointly to go to trades fairs and those types of things. We’re working with our own departments, Education for example, to really take advantage of this Express Entry Program that the federal government is going to be rolling out in January where businesses, government, whoever has a need, can reach into work from another country, from another place and say I need an accountant or engineer or whatever professional or technical person you need and I will give them a job here, that there’s going to be a program that’s going to give within six months, apparently you should be able to get these folks from wherever they live to where they’re going to work, which in this case would be the Northwest Territories. We have a shared interest with the mines there, as well, because we all have vacancies and hard-to-fill positions that we’re working hard at. We want to work with them. As well, we’ve sorted out the confidentiality issue, for example, with Education where now we can have a greater connection with the students that we’re paying to go to school down south, not only for ourselves but for the private sector so they can know who is in engineering, who is in finance, who is in the social sciences and we can do a better job of recruiting and making sure our own students and our own children, Northerners, know that not only we’d like them to come back but we’re going to actively recruit them to come back. So we have a very shared common interest to see that we can have that type of sustainability and have that type of population growth where we share our efforts where it makes sense to do that work in terms of the systems and making sure that we can address our needs together. Thank you.
Thank you. I’d just like to thank the Minister for that comprehensive response, and that is good news and some of that I was not aware of, some of those initiatives that may be more recent. So, I’m sure the public will be glad to hear of them and that’s what this forum is all about. Thank you, Mr. Chairman.
Thank you, Mrs. Groenewegen. General comments. Does committee agree to go into detail?
Agreed.
Thank you, committee. Committee, if I can get you to turn your attention to your NWT Capital Estimates binder. We are currently on page 27, which we will defer. So again, committee, page 28, Finance. Mr. Bromley.
Thank you, Mr. Chair. Just on the detail here, I’m just wondering if I can get a brief explanation of what an IT system to implement functionality within the treasury suite of applications to forecast cash requirements and manage portfolio investments means.
Thank you, Mr. Bromley. Minister Miltenberger.
Thank you, Mr. Chairman. That was what we thought was fairly plain English, but I’ll ask the deputy to provide further detail.
Thank you, Minister Miltenberger. Mr. Aumond.
