Thanks to the Minister. What kind of a time frame are we looking at? Is it going to be within the 2013-14 budget year or are we looking at 2014-15? Thank you.
Mr. Chair, the framework will be done this current fiscal year and we would look to advance it fully into the next ‘14-15 budget cycle.
That’s good. Thanks to the Minister.
Committee, we are on 5-17, Finance, activity summary, fiscal policy, operations expenditure summary, $24.945 million. Does committee agree?
Agreed.
Okay. Page 5-18, Finance, activity summary, fiscal policy, grants and contributions, grants, $23.6 million. Does committee agree?
Agreed.
Thank you. Page 5-19, Finance, information item, fiscal policy, active positions. Are there any questions?
Agreed.
Thank you. Page 5-21, Finance, activity summary, budget, treasury, debt management, operations expenditure summary, $26.762 million. Mr. Bromley.
Thank you, Mr. Chair. Just in terms of managing our debt, am I correct that we only have short-term debt, we don’t have long-term debt?
Thank you, Mr. Bromley. Minister Miltenberger.
Thank you, Mr. Chairman. We have both. We have some long-term debt with the bridge. We have other long-term debt against our borrowing limit that’s self-financing. As well, we have short-term debt. Thank you.
Okay. All of the debt that is not self-financing is the amounts that we pay in interest the cost of that debt indicated on this page, or could the Minister tell me what it is or which ones would fall under that category? Thank you.
Thank you, Mr. Bromley. For that we’ll go to Mr. Kalgutkar.
Thank you, Mr. Chair. If the Member would look at the other expenses section of the page, that $13.1 million includes $8.2 million for the Deh Cho Bridge interest payment and $5 million for short-term interest costs as well. Thank you.
Okay. So our short-term debt has been in the order of $5 million, I have three years in front of me, it looks like our short-term debt has gone up from $580,000, to $5 million, to the $13.2- roughly million. Am I correct in that? Thank you.
Thank you. What we have provided for is an allocation of $5 million for short-term interest costs, but as the Member has alluded to, our short-term interest costs have been lower than that. If Members recall, we increased them for the ‘12-13 budget because we were projecting some pretty significant short-term borrowing debt during that year and also if Members recall, we increased our authorized borrowing limit for short-term debt to $275 million. So the amount that we have provided for is just to have some kind of buffer there just in case we have increased borrowing needs during the course of the fiscal year. Thank you.
Thank you. I appreciate Mr. Kalgutkar’s comments there. I knew it wasn’t that simple. So we’re proposing $8.166 million for Deh Cho Bridge interest payments for this coming fiscal year. Will it stay at that amount and for how long? Or what’s the forecast for amounts there and longevity of that payment? Thank you.
Thank you. The long-term debt payments on the Deh Cho Bridge debt are linked to inflation. So they won’t start going up, but for the medium term they’re going to be around the 8.1 to 9 million dollar range. They are about half offset by the bridge tolls. Thank you.
Thank you, and just the second part of that was how many years we will be paying that amount. Thank you.
Thank you. For the term of the loan which is 36 years. Thank you.
Thank you. My second topic of interest here was the Mackenzie Valley fibre link contribution. I think this is a project that we all are looking forward to seeing completed. There’s $7 million listed for this coming fiscal year. Is that a one-time cost or, again, do we have a forecast into the future for that project? Thank you.
Thank you. Right now the $7 million is accounted for if we procure the project as a pure P3 type model. So there will be an initial cash contribution to the project to help offset the capital cost of $7 million, and then ongoing there’s an availability payment of $7 million to help service the debt payment. Thank you.
Just to complete the picture for me, and ongoing for how many years? Thank you.
Thank you. Right now we’re modeling a 20-year bond issue. That’s what it will be based on. Thank you.
Thank you, Mr. Kalgutkar. Minister Miltenberger.
So it is clear for the Member or for this House as well, we are actively pursuing discussions with some of the Aboriginal governments looking to set up a joint venture, which would be separate and wouldn’t involve the P3 approach. So what structure we choose to go forward could possibly affect the dollars. The other thing, of course, is if this project in fact generates the revenue we think it will, then the increased revenue will more than offset and diminish what’s owed. Thank you.
Thank you, Mr. Minister. Mr. Bromley.
Thank you, and thanks for the additional details. That was my next question, was to what degree this would be a self-financing project, and I believe I heard the Minister say that the anticipation is that this would be, to some degree, a self-financing project. Maybe I can just get that confirmed. Thank you.
Thank you. As we had shared information in terms of our projections, but this project is seen to be a revenue generator over time. Once we pay down the capital investment costs, the remote sensing operation out of Inuvik, which is the anchor tenant, would be the main revenue generator where we have countries, and agencies, and departments lined up to put in satellites and rent space on our fibre optic line, and then there will also be the ancillary benefits tied into the putting in of the fibre optic line into all the communities down the valley as we install the main line. So over time this is going to, and I’m talking decades, that this is anticipated to be a net revenue generator I think “par excellence.”
Are there investment opportunities here? Will the government make money on this? Thank you.
Thank you. We’re looking at two things here, but we’re going to be, from the start and on into the future, a major partner in this if we go out to Aboriginal governments. Once the debt is paid off it will generate revenue. What we’re looking at is what would be a more modest than would be normal return on investment so that we can make our best efforts to keep the cost of service into the communities as reasonable as possible, which we think will generate a longer-term benefit and get us more customers. So, yes, there is going to be revenue generation and it’s also going to have some broader economic impacts. The Member talks about will we look at full cost accounting, and full cost impacts and benefits to the communities where they will have significant, we believe, opportunities in each community. Thank you.
Thank you. Yes, the Minister is outlining many of the reasons that I support this project, but I’m striving for transparency here, as I’m sure he realizes. So, yes, this will generate revenues once it’s paid off. I’ve had a lot of investments on the basis of that. Some of them manage to get paid off and others didn’t. How long do you think, is there a forecast on paying this off? I realize in a full costing accounting approach that, in fact, there are many benefits that should accrue very early on the moment that things are hooked up here. Thank you.
Thank you. We’re projecting a fairly aggressive repayment schedule of about 10 years.
Thank you, Minister Miltenberger. Mr. Bromley, your time is expired. Let me know if you need back on. I have Ms. Bisaro.
Thank you, Mr. Chair. I have to start with my pet peeve and that’s the amount of money that’s in “other.” I talked about this a lot. I thought we’d gotten rid of that, Mr. Minister, and I understand the explanation. But if it’s an amount that’s $50,000 or $200,000 then it probably isn’t too much, but when we have an “other” of $13 million, although I appreciate that $8 million of it is the debt, it’s a little difficult to sort of look at the budget and kind of go yeah, yeah, we just have $13 million of undescribed money. I’ll just leave that at that.
I wanted to talk a bit about insurance and self-insurance programs as listed under the activity description. What self-insurance programs do we run or do we have? Thank you.
Thank you, Ms. Bisaro. For that we’ll go to Mr. Aumond.
Thank you, Mr. Chair. We run, I guess, our own self-insurance programs for our assets that we have as a GNWT that we insure. We have premiums that we pay for others as well.
With respect to the Member’s comments about other expenses, I appreciate the comments and we will endeavour to see what we can do to provide more clarification for next year.
I appreciate Mr. Aumond’s efforts to try to get rid of “other.” With regard to our GNWT assets, we are responsible for them so we are self-insuring our own assets, but there are always risks when we have assets and the risk of loss. I think there’s a program called Property Impairment Reporting Program for GNWT buildings. Could I get confirmation that that is a program that we use to assess risk on our GNWT assets?
In part, we do use that program and there are other programs that our underwriter, for those assets that we do procure insurance on, direct us to undertake in conjunction with the fire marshal and others to provide all types of inspections and make sure that we have not only preventative maintenance programs that our Department of Public Works and Services would undertake on everybody’s behalf but also to make sure that the people who occupy the building and operate the building use it in a way that is consistent with what the underwriter or broker is directing.
I just want to follow up. In terms of risk management, do we feel comfortable that we have a really good handle on all of our buildings, all of our GNWT assets in terms of the insurance risk and risk of loss, I guess for lack of a better way of putting it?
Thank you, Ms. Bisaro. Mr. Miltenberger.
Thank you, Mr. Chairman. We are reasonably happy. There are many things we don’t control when it comes to risk management. For example, the majority of our communities are in the middle of the Boreal Forest. There are more and more extreme weather events across the land. The whole concept of stationarity, which is the predictability of those types of occurrences, has all but disappeared. The insurance business, in fact, no longer looks at stationarity because it makes forecasting and doing insurance, and making projections almost impossible. Given a number of those broader major variables, we believe we have a reasonable handle on the issue of risk management.
My next question has to do with assets which have been downloaded, so to speak, from GNWT to municipalities. As municipalities have taken over their own control of their communities, many buildings have been devolved from GNWT down to the municipalities. In terms of insurance and risk management of those buildings, do we have any hand in that or is that totally the responsibility of the municipality?
We worked with communities to set up an insurance program for the communities and we invest money in that. A number of years ago we were all being collectively put in the poorhouse by the usurious insurance rates companies were charging, and we went to a self-financing one in the North and we invest in that. It’s cost effective. It’s done through NWTAC.
Just one last question. The Minister just said that we still put money into NORCIX to the NWT Self-Insurance Program. I thought we had stopped doing that.
Thank you, Ms. Bisaro. For that we’ll go to Mr. Aumond.
Thank you, Mr. Chairman. The Member is correct; the GNWT does not provide a direct contribution to NORCIX, but the GNWT does provide money and, in some cases, provides specific funding to purchase insurance to communities so that they can procure the insurance through NORCIX or any other avenue they wish to pursue.
Thank you, Mr. Aumond. Continuing with questions I have Mr. Bouchard.
