Thank you, Mr. Chairman. I just have a question about the fibre optic link contribution, the $7 million. Is that an interest cost or can we capitalize it?
Thank you, Mr. Bouchard. For that we’ll go to Mr. Kalgutkar.
Thank you, Mr. Chairman. The payment is really a marker to give us a negotiating mandate to how we’re going to structure the actual corporation that’s going to manage the Fibre Link Project for us. As I noted before, the first payment is going to be towards the capex of the project, so the first is a $7 million contribution to whomever the entity is that manages the project towards the capital costs and then the ongoing payment of $7 million to offset the debt servicing costs. As the Minister alluded to before, in the early days there are not sufficient revenues to generate sufficient cash to pay down the debt so the GNWT is assuming that risk, and the $7 million is to help offset that risk. Going forward, as the Inuvik satellite facility grows, the amount of that payment should decline as well. The amount of the payments also will depend on how we structure the ownership of the corporation.
Just for my clarity, then, this is a payment we’re going to make to an entity that takes in all the partners in the fibre optic link.
Thank you, Mr. Bouchard. For that we’ll go to Mr. Aumond.
Thank you, Mr. Chairman. As Mr. Kalgutkar has explained, it will depend on how the ownership structure unveils itself. It may take place in terms of a contribution to capital, it may take the form of an availability payment. It may also represent, depending on how the ownership structure is defined and considered at the end of the day, part of the GNWT’s contribution for its ownership in the facility itself.
I just look forward to seeing the way the structure is completed once we have the project up and running and the entity, how it’s going to be run.
Thank you, Mr. Bouchard. Page 5-21, Finance, activity summary, budget, treasury and debt management, operations expenditure summary, $26.762 million.
Agreed.
Page 5-22, Finance, activity summary, budget, treasury and debt management, grants and contributions, grants, $7 million.
Agreed.
Page 5-23, Finance, information item, budget, treasury and debt management, active positions.
Agreed.
Page 5-25, Finance, activity summary, office of the comptroller general, operations expenditure summary, $22.377 million. Ms. Bisaro.
Thank you, Mr. Chairman. Just two questions here. One has to do with the Audit Bureau. We have, in my experience, been struggling to fully staff the internal Audit Bureau for a number of years now. I just wondered if I could get an update. Do these numbers in this budget reflect a fully staffed Audit Bureau?
Thank you, Ms. Bisaro. For that we’ll go to Mr. Aumond.
Thank you, Mr. Chairman. That is correct.
That’s good to hear. The other question I have here has to do with the reporting of the public accounts, and I know that the department has been struggling somewhat to get public accounts out by the end or the date that is legislated and by the end of the calendar year. I gather, I think there have been a few changes to the reporting of the public accounts. Is it likely that the department’s going to be able to get the public accounts out a couple of months earlier than we have seen them for the last few years?
Thank you, Ms. Bisaro. Mr. Miltenberger.
Thank you, Mr. Chairman. There has been significant improvement in terms of the time. We have met yearly, at least I meet yearly, the staff meets more often with the Audit Bureau, the audit folks, and we work with all the agencies that are supposed to be reporting in. We have shortened that timeline and are going to keep working on shortening it. There has been recognition of the improvement by the Auditor General, but I’ll ask the deputy if he wants to add anything further to that matter.
Thank you, Mr. Miltenberger. Mr. Aumond.
Thank you, Mr. Chairman. As the Minister stated, we have made some improvements. By the legislation, we’re supposed to have the public accounts ready by the end of the calendar year and I think this year we had them ready in October. The current Financial Administration Act dictates that we have to table the accounts at the earliest possible session, which was this one here. One of the changes we are contemplating on revising the act is to make the public accounts available when they are ready. We won’t necessarily have to wait for a session to table them to make them public.
Thank you, Mr. Aumond. Ms. Bisaro.
Thank you, Mr. Chair. Thanks to the Minister and the DM for the information. I just want to say that I appreciate the fact that the department’s been working really hard and the Auditor General also has been working with the department really hard to try and improve the process and to get the public accounts out a lot earlier. I’ve seen an improvement and I just hope we can maintain that. Good on you for working so hard.
Thank you, Ms. Bisaro. Moving on with questions, I have Mr. Bromley.
Thank you, Mr. Chairman. I want to just ask a little bit about the Environmental Liability Fund. It came up in one of the previous departments we were discussing, it might have been Public Works and Services, I can’t remember now, or Transportation. Maybe I could just start by getting clarification on what this is, how much is in the fund if it is a set amount, and how it’s managed to meet the needs. I know that environmental liability can go from zip to a whole bunch in no time at all. How does it work to meet that sort of volatile need?
Thank you, Mr. Bromley. For that we’ll go to Mr. Aumond.
Thank you, Mr. Chairman. Back in 2007-2008 the GNWT, through the Financial Management Board, established a policy and authority for all the environmental costs related to contaminated sites to be paid through a central fund. Prior to that time the government would take an assessment of all the environmental liabilities it had, and it would note them in its notes to its financial and in the public accounts and financial statements. That is no longer the case. We now manage under a central fund.
Back in 2007-08, when we did an original assessment, we booked a large amount of money on our books to remediate those sites. As at March 31, 2012, the fund had a level of $44,187,970. It was a process where at the end of every year, as sites become assessed and the values and the cost of remediated sites become known, adjustments are made to the fund. As sites are remediated, the fund is reduced by the amount that was booked. We undertake that process every year and we make adjustments where we have adjustments that exceed the appropriation of the government that has been approved by the Assembly, that we will come back and seek a supplementary appropriation to do that if that was required. That hasn’t been the case for the last couple of years.
So are we, just for my clarification, booking the value of the estimated cost of remediation or are we booking dollars to pay for the remediation, if you get my drift.
Mr. Bromley, before we continue with these questions here, I would just remind the Member that we are on operations expenditure summary under the office of the comptroller general and we’re hearing about things more like waste management questions. Can you indicate to me how this is related to these pages, please?
Mr. Chairman, if you look at the third paragraph, the second last line. The Environmental Liability Fund.
Thank you, Mr. Bromley. For that we’ll go to Mr. Aumond.
Thank you, Mr. Chairman. The answer to the Member’s question is both. When we take the assessments, usually after about a Phase 3 assessment, based on those costs we would book that into the fund, and then the actual cost of remediation would be paid through that fund, whatever the cost is to remediate it.
I think I’m getting it. If I were to ask what our current environmental liabilities are, knowing that the fund is about $44 million would tell me that that’s what our current liabilities are right now. Is that correct? If not, maybe I could find out what the current environmental liabilities are.
As of March 31st that was the value of the liabilities.
Okay, so this is obviously a substantial fund. How current are we in terms of knowing what our environmental liabilities are? I imagine we’re moving steadily towards a routine sort of assessment and so on. Are we fairly current on those or are we still catching up with today’s world in that respect?
As I said, we’ve been at this in a substantive and in what I would consider to be a robust way since 2007-08, and we’ve continually adjusted the fund based on the assessments as we undertake them, so we think we’ve identified most of the sites that we are aware of, and we’ve assessed them to the degree that we have up until March 31, 2012.
As I stated earlier, this is ongoing work. We have a formal committee within the bureaucracy that looks at this and manages this, and there’s adjustments made to the fund on a yearly basis.
Thanks very much for this information. Just one last one here. Do we categorize at all? I’m wondering what might, if we know, roughly, what proportion might be due to fossil fuels versus asbestos or contaminants of a different nature.
I would have to confirm, but I would believe so, because we would have that information through the various ESAs that would be undertaken, but I do not have that information here with me today.
I wonder, could I ask the Minister to provide that. I don’t want it to be an onerous, time-consuming exercise, but if that could be readily pulled out, that would be useful.
Thank you, Mr. Bromley. Minister Miltenberger.
Yes, Mr. Chairman, we’ll provide that information.
Thank you to the Minister. I think on a full cost accounting, I think that sort of information would be useful.
I just want to look now at the Power Subsidy Program. I know, under debt management, we subsidized about $27 million last year and we’re proposing $21 million this year. I see that directly under the Power Subsidy Program we’re subsidizing a little over $11 million each year. Now, that’s up quite a bit from ’11-12 when it was at about $5.2 million, and I know rates are going up and whatnot. Is this a temporary rise or are we settled in at this amount for the indefinite future, at roughly $11 million, and what will influence it as we go forward?
Thank you, Mr. Bromley. Mr. Kalgutkar.
When the government did the electricity rate review and we went to the rate zones, our power subsidy cost did go down and what influences that program is, obviously, the power cost, right? So as power costs go up, the subsidy will increase as well.
It’s never simple, Mr. Chair. Let’s see. Our rate went down but because absolute costs for electricity are up it ends up being a higher amount. Maybe I can get Mr. Kalgutkar to try that one more time and what we can expect to see in the future here.
Thank you, Mr. Bromley. We’re actually going to go to Minister Miltenberger first.
Thank you, Mr. Chairman. The subsidies are linked to the rates and as the rates of power go up, and we’ve been having the rate increases over the X number of years, even though they’ve been cushioned, the subsidy goes up commensurately, and they’re linked, so they’re going to keep moving together.
I appreciate that plain language version of what’s actually happening here. To plain language it even more, we’re going to be paying more and more subsidies into the future, so it is going up as time goes by. I guess what’s really important here is to try and deal with the underlying costs of generating power, and we’re not putting much towards that. We are putting some, but it’s very modest compared to these sorts of amounts that I’ve been quoting: last year, $27 million; this year, $21 million. It looks like it’s sort of dropping a little bit next year but, obviously, this amount is going up. This is a long-term commitment, so it would be really worthwhile – I’m sure the Minister would agree – investing in how to get those rates down. I throw that out as a comment, but I’d welcome any comments by the Minister. I know he would dearly love to see us figure out how to reduce power rates, fundamentally, as well, which would then, of course, bring down our power subsidy program as well.
We have a common goal here. We are investing significantly and are going to continue to invest, not only money but planning and policy development in things like biomass and solar. We’re going to be coming forward with a very ambitious hydro project that’s going to allow us to link the grids and have reasonable-cost power available for economic development as well as provide power into some communities that are currently on diesel. We are going to, as well, work with Inuvik and other thermal communities on the Liquid Natural Gas Initiative. We are very committed to that.
We also want to push on encouraging people to switch to alternative energy. As well, we want to continue to push efficiencies and conservation, which is also an underappreciated area in terms of what’s possible in terms of savings. We are committed to doing that as well. The reality, though, across the world is the energy costs continue to rise everywhere and it is a challenge for all of us.
