Mr. Speaker, I move, seconded by the honourable Member for Thebacha, that Bill 17, Northwest Territories Intergovernmental Agreement on Resource Revenue Sharing Agreement Act, be read for the second time.
Mr. Speaker, this bill provides for the sharing of the net fiscal benefit in accordance with the Northwest Territories Intergovernmental Resource Revenue Sharing Agreement. Thank you, Mr. Speaker.
Thank you, Mr. Premier. Motion is in order. To the principle of the bill.
Question.
Question has been called. Motion is carried.
---Carried
Bill 17 has had second reading. Mr. Premier.
Mr. Speaker, I seek unanimous consent to waive Rule 69(2) and have Bill 17, Northwest Territories Intergovernmental Agreement on Resource Revenue Sharing Agreement Act, moved into Committee of the Whole. Thank you, Mr. Speaker.
---Unanimous consent granted
Item 20, consideration in Committee of the Whole of bills and other matters, with Mrs. Groenewegen in the chair.
Good afternoon, colleagues. I will call Committee of the Whole to order. What is the wish of committee? Ms. Bisaro.
Thank you, Madam Chair. Committee would like to consider Committee Report 2-17(5).
Is committee agreed?
Agreed.
Okay, thank you. We will resume after a brief break. Thank you.
---SHORT RECESS
I will call Committee of the Whole to order. Before we launch into the business before us today, I’d like to recognize Mrs. McLeod in the visitors gallery, the Premier’s wife, and his two very handsome grandsons.
---Applause
Committee, we were going to deal with the Standing Committee on Government Operations Report on the Review of the 2012-2014 Public Accounts. We are going to proceed with that now. I am going to ask the chair of the Standing Committee on Government Operations, Mr. Nadli, to please deliver the opening remarks. Mr. Nadli.
Thank you, Madam Chair. The Standing Committee on Government Operations has presented its Report on the Review of the 2012-2013 Public Accounts.
The public review took place on January 24, 2014. The committee’s report includes 10 recommendations. The standing committee thanks Assistant Auditor General Terry DeJong and his staff at the office of the Auditor General of Canada for their generous assistance in this review.
The committee also thanks the NWT comptroller general, Warren St. Germaine, and his staff for their assistance in the appearance before the committee during the public review.
The committee feels strongly the timely completion of the public accounts contributes to accountability of government. For this reason, the first four of the 10 report recommendations include with improving the timeliness of the public accounts.
The report acknowledged a notable improvement of the timeliness of the public accounts over the previous years and makes recommendations for future improvements.
The report also recommends that a list of government agencies not meeting the deadline for completion of their audits be included each year with the public accounts.
The committee gave consideration to the Government of the Northwest Territories fiscal position and the challenges faced by government in paying for the services it provides to the public. The report encourages the GNWT to take steps to maximize its own-source revenues, paying particular attention to self-reporting taxes such as income tax, liquor, fuel and tobacco taxes.
Again, with respect to the GNWT’s fiscal position, the committee took note of the commitment made by the GNWT to be accountable for its own Fiscal Responsibility Policy by reporting on the debt management results of government through the public accounts.
The report recommends that future public accounts include a detailed explanation of how the government has performed for the year with respect to the Fiscal Responsibility Policy and makes suggestions as to how this can be accomplished.
The standing committee also paid particular attention on the notes on accounts receivable and on loans receivable. The committee again expressed its concern with the amount of money owing on accounts receivable from the Government of Nunavut and with the loss of revenue to the GNWT in maintaining such a large interest-free receivable.
The report recommends it reviews its accounts receivable from Nunavut to develop targets and measures for improving collections and to identify and write off those debts deemed to be uncollectable.
The committee, again, took notice of the significant mortgage receivable owning to the NWT Housing Corporation and Members reiterated their belief that the NWT Housing Corporation could be doing better in collecting on these debts.
The standing committee recommended again this year that the government monitors loans receivable and develops targets and measures to improve collections with a view in reducing the allowance for doubtful accounts to less than 30 percent of the total loans receivable.
Environmental liabilities have become a major issue in public sector accounting. The standing committee took great interest in learning more about the remediation of environmentally contaminated sites for which the government is accountable. The committee requested and received a list of all sites requiring remediation and has included this list in Appendix B of this report.
The committee recommends that the government continues to provide updated timetables and schedules for the remediation for all known potentially contaminated sites for which the GNWT is responsible; further, that this list be included annually in the public accounts.
The Standing Committee on Government Operations concluded its report by recommending that the government provide a response to its recommendations within 120 days. The committee intends to continue to give priority to its mandate to review the public accounts so that the GNWT’s spending issues are publicly examined and all relevant information is placed before the public. Thank you, Madam Chair.
Thank you, Mr. Nadli. Any general comments? Mr. Dolynny.
Thank you, Madam Chair. I think, first and foremost, I need to congratulate the department on providing a signed copy of these public accounts at least one month sooner than they did in 2012 and it was tabled in November 2013, which is, again, three months sooner than the process that we did, the first time we’ve done this in many, many years. I appreciate the government for doing that.
Although the government may have received what the Auditor General called a “clean opinion,” it’s important to note that variances in any one category greater than $24 million are not followed up in any of the samplings of the Auditor General. Therefore, we could still see some smaller variances that are possibly not captured within that framework of this audit and that it could have a huge impact on our bottom line.
We also need to talk about our finances from a sustainability, a flexibility and a vulnerability aspect and that was echoed loud and clear within that report and it’s no secret that our Territorial Formula Finance Grant is our main life support and we’re depending on it with our own antiquated and limited own-source revenues. Moving forward we know that this is going to be very problematic, as was noted by the Auditor General.
The Auditor General notes that the GNWT continues to be stable, but equally notes that we have limited flexibility to raise new revenues and it did emphasize many times of that vulnerability over control of our future revenues. Although the Auditor General did not go into it because this is something relatively new, questions around the opportunity for us to take what we know on our public accounts and look at the future servicing of debt is what we’ve heard from the department here about possibly raising our debt ceiling to well over $1.8 billion. This question was posed during a public forum with the comptroller general and there was some doubt and there was some cast of shadow on whether or not we can, from what we know from public accounts, really afford moving forward with such a state of borrowing.
Clearly, even though we see what I think is the appearance of a healthy balance sheet, many in this room know full well that we’re definitely heading into a debt wall – I like to call it the wall of worry – and sometimes when you look at the public accounts it doesn’t really echo that because of the way it’s designed. I just wanted to make sure that that goes out in public. It gets confusing, not only for Members but I think for the public, when you see imbedded within the framework of public accounts issues of debt and net debt. These types of terminologies, I think, really confuse the public and it confuses many of the Members in this room. I think it’s important that somehow we need to be a bit clearer as we move forward within this framework.
We also had within the report, and clearly, that we have huge fluctuations in our personal income tax and our corporate income tax, and I think it clearly demonstrated our lack of understanding and how these changes, and these changes within the framework of this public accounts was roughly to the tune of about $38 million. This does hurt our bottom line and it does have a huge impact on our fiscal strategy for budgeting, as we clearly saw during the main estimate process for this year, and for our large infrastructure planning for years to come.
Also, we talked about within the framework of the public accounts was the issue of the disposal of public housing, public housing loan forgiveness and dealing with public housing rental arrears. Although the Auditor General does say we did follow the proper accounting principles, there is much debt that lingers in the shadows of the books, and this was also talked about within the four walls of committee and also with the Auditor General and the comptroller general of the Northwest Territories. Clearly, this needs to be cleaned up. This is a very aged receivable and we don’t even know the dating of that receivable. This was possibly years that these numbers have been on the books and we’ll never collect this money. So to be prudent, to be fiscally honest with the public, we’re going to need to clean up those arrears and leaving them in the book are, clearly, wrong. I think you might see some future motions on that and we’ll talk about that today.
We have a revenue problem, plain and simple, but the public accounts books clearly indicate that we do have a revenue problem and it is coupled with many of what we called self-reporting mechanisms. One, for example, which I know is near and dear to my heart, is tobacco, and that’s why I continuously talk about that self-reporting and how we do a fairly substantial poor job on validating the collection of. I want to echo the issues of even the petroleum tax, these are self-reporting numbers that the government here does not do an adequate job in making sure that we are collecting our fair share of taxes properly. Clearly, there is money left on the table and I think we’re failing our residents if we don’t start to think about doing something in those areas.
What adds a little bit of complexity is when we continuously hear the government talk about their Fiscal Responsibility Policy and what they do with the annual surplus. I can probably spend another 20 minutes just on this very topic, but what is concerning to the Members here of the committee, including myself, is really the detailed framework about how this policy is put into action, how this policy is branded and backed up publicly. Quite frankly, the surplus that we had in our books for the fiscal year, it really begs into question where this money or this surplus is going. Again, there are clear definitions around the Fiscal Responsibility Policy, which states 50 percent of that money is to go towards short and long-term borrowing, but we don’t know what that money is, we clearly don’t know if this is new money, old money, old debt and new debt. So there is a lot of ambiguity within the framework of the Fiscal Responsibility Policy and I think that we might even hear more about that later today in some of the motions.
Finally, and again, echoed by the Auditor General themselves, is that the issues of employee future benefits and failing to recognize our liabilities related to the remediation of contaminated sites is going to become extremely problematic for this government. So much so that I believe, and I think some of my Members also will echo this, I’m hoping that we have to start looking at actuaries and to assess what is our risk. I know we’ve got some smart folks up in the Finance department and I’ve always said that we’ve got probably some of the top people in North America working for us, but this is very specialized work. This work requires the expertise, which I believe goes far beyond the four walls of the GNWT and this risk is real and this risk could come back and haunt us. So I’m hoping that through repetition and through emphasis of such things as public accounts and what we’re doing here today will clearly give direction for government to say look, yeah, we recognize this may be out of our realm and we’ve got to do something about it.
So, this is just kind of a general overview of what I picked up as a Member of the committee. I look forward to getting further into detail today. Thank you.
Thank you, Mr. Dolynny. General comments. There are motions with respect to this committee report, Ms. Bisaro.
Thank you, Madam Chair. Just a bit of a preface, I guess. This was my second opportunity to review the public accounts and each year it adds to the learning, it makes it a little bit easier. I still struggle with some of the accounting language and some of the ins and outs. My colleague mentioned debt and net debt and that’s a difficult concept to get the head around, but I do want to thank the office of the Auditor General; their staff were extremely helpful to us. They’re still teaching us how to deal with the public accounts and we’re learning every time we do them.
Thank you. The motion is in order. To the motion, Ms. Bisaro.
Thanks, Madam Chair. I’d like to just comment a bit on this and on the timing of the public accounts that this report references. The completed public accounts were tabled on the 23rd of October of 2013 and the deadline for tabling of the public accounts is the 31st of December of 2013. So this was only the second year, I think, in quite some time that the public accounts had been tabled in advance of their deadline. So we were really pleased that the government was able to do that. In addition, we were able to get an embargoed copy of the interim public accounts and that’s the government portion of the public accounts, it doesn’t include all the education authorities and the health authorities and so on, but we were able to get the interim public accounts as a committee on the 12th of September in 2013 and that was in advance to the business plans that we were about to discuss. It certainly made things a lot easier for us, gave us information ahead of time, it was very close to the mains and, in future, if it’s at all possible to get them earlier that would be a preference of committee. Getting the public accounts, even though it’s only part of it, but getting it within a couple of days of when we’re going to discuss business plans makes it pretty difficult to go through that whole document.
I do want to say that the government, in the last couple of years, has done an excellent job of advancing the timing and the completion of the public accounts. This motion asks for them to be completed by August 31st of each year. This is a repeat of a motion that we made last year as a committee, or a recommendation last year, and it’s not to suggest that the government is not doing a good job, they are, and we are gradually getting closer and closer to that August 31st deadline, but as a committee we felt it important to put this recommendation in to indicate that August 31st is our preference. If we can ever get there, that’s certainly a better time than receiving it any time after August 31st. That’s the background to the motion.
Thank you. To the motion.
Question.
Question is being called. The motion is carried.
---Carried
Ms. Bisaro.
Thank you, Madam Chair. I have a second motion. I move that, as part of the standard reporting process, the comptroller general include a list of agencies in the consolidated public accounts that did not meet the deadline for completion of their audits.
Thank you, Ms. Bisaro. The motion is in order. To the motion. Ms. Bisaro.
Thank you, Madam Chair. I would like to just speak to this motion as well. The public accounts include all of our arm’s-length entities. It includes our Crown corporations. It includes our health authorities. It includes our education authorities. There are many, many authorities which complete the consolidated public accounts. We have all the government departments and then we have all the other authorities. Some of those authorities have a fiscal year end which is June 30th, and that makes it rather difficult for the government to get the consolidated public accounts done by August 31st, which was what I was referencing earlier; however, they’ve done a very good job of doing that.
In each of the two years that we’ve gone through the public accounts, there have been entities which have not met their statutory deadline for reporting or for having their audit done, so we wanted to make sure that that was noted. In this past year there was one entity, and it was the NWT Housing Corporation, who did not meet their deadline for the completion of their audit. That certainly was an improvement over the previous year when we had rather more than that. I can’t remember exactly how many. But we feel, as a committee, that any entity that does not meet their deadline for their audit should be reflected in the public account so that if somebody in the public wishes to go to the public accounts and see how various entities are doing they can see that, oh, yeah, last year the Housing Corporation didn’t meet their deadline for their audit. Sorry, Minister, but there it is.
---Interjection
They were building houses. Sure. You still have to account for the houses. That’s the background on this motion.
Thank you, Ms. Bisaro. To the motion. Mr. Dolynny.
Thank you, Madam Chair. I think Ms. Bisaro summed it up quite well. Again, there is a fiduciary obligation on behalf of all of our stakeholders to report their financial statements to public accounts and to this government, and as Ms. Bisaro mentioned, the Housing Corporation… Actually, there were four that did not meet the criteria, and I wanted to make sure that that was clear. We had Aurora College that required an extension. We also had NWT Business Development Investment Corporation that also needed an extension date, and we had Northwest Territories Hydro Corporation who also required an extension date.
The purpose of this motion is clearly to put on notice all associated public agencies that they have an obligation and that they have to make sure that they get their affairs in order to make the public accounts deadline. That being said, I can tell you that should these public agencies fail to meet this obligation criteria, I can only assume that in future public account audits the committee might request these agencies appear before committee or their designate to explain why. We’re basically giving all these agencies a heads-up. This is a requirement that will be from the Government Ops committee to make sure that, again, affairs are in order, these are solid dates, they are given fair warning, and these are the rules of the game, and we’re hoping that all public agencies will adhere to them.
Thank you, Mr. Dolynny. To the motion.
Question.
Question is being called. The motion is carried.
---Carried
Mr. Yakeleya.
Madam Chair, I have a motion. I move that the Department of Finance continue to work with the Auditor General of Canada and GNWT departments, boards and agencies toward the completion of both the interim and the final public accounts at the earliest possible date each year.
Thank you, Mr. Yakeleya. The motion is in order. To the motion.
Question.
Question is being called. The motion is carried.
---Carried
Mr. Yakeleya.
Thank you, Madam Chair. I have another motion. I move that the Northwest Territories Housing Corporation submit its annual report within 90 days of the fiscal year end; and further, if this does not prove to be possible, the Housing Corporation should seek appropriate approval for an extension to their deadline and provide the House with reasons for the delay.
Thank you, Mr. Yakeleya. The motion is in order.
Question.
Question is being called. The motion is carried.
---Carried
Mr. Dolynny.
Thank you, Madam Chair. I do have a motion. I move that the Department of Finance undertake the necessary audits and investigations required to ensure that revenues from self-reporting taxes are fully maximized and that the department report back to the Standing Committee on Government Operations with respect to its findings by August 31, 2014.
Thank you, Mr. Dolynny. The motion is in order. To the motion. Mr. Dolynny.
Thank you, Madam Chair. Well, it should be no surprise to the Cabinet and the Members in this room my continued journey on putting a lens on what I refer to as one of the largest loopholes in our taxation collection, I think, in modern history that we deal with in the Northwest Territories.
This loophole, this self-reporting loophole is exactly what it is. It’s a loophole. This self-reporting aspect is rarely monitored by government. We don’t have enough investigators to do the audits, and clearly, when audits are done, miraculously, money is found. This motion clearly sets the stage and the concern not only as one Member has but a number of Members have. This is a committee motion and so I hope that this will put a little bit more lens on the subject. The fact remains, within the audited statements of public accounts there was, indeed, a $1.7 million shortfall in tobacco tax collection alone in the fiscal year. This is an 11.2 percent drop in tax collection with very little explanation, very little data, and very little statistical data to support why there was a drop.
There was some degree of discussion here in the House recently about it with the Minister of Finance and I believe that there is work being done. However, that being said, this motion is very clear, and this motion is very specific not only to tobacco but all self-reporting taxes including such things as fuel tax, as well, which also had a fairly substantial delta in returns from the main estimates. Those are my comments.
Thank you, Mr. Dolynny. To the motion.
