Thank you, Mr. Chair. I’d like to follow up to a response earlier today to some of my general comments with respect to active positions. The fact remains that the numbers have not changed from fiscal 2014 to the proposed budget of 265 total employees, and if I look at the disbursement of jobs per allocation of regional allocation, nothing has changed. Everything has stayed the same. There may have been transfers in and out, but the actual numbers are still whole.
Again, if my math is correct, this increase for this category, as I said earlier, is 7.7 percent, and we heard from the deputy minister that about $950,000 of it was due to collective bargaining or what we call forced growth. That’s only about 2.9 percent, which leaves, again if my math is correct, 4.8 percent that is not forced growth. We’ve heard that there was $984,000 in transfers and some other stuff in there.
I would like to get more detail if I can on that breakdown of that 4.8 percent that is not forced growth so I can fully understand what will be transpiring that justifies that extra expenditure.
Again, every department is going to be scrutinized to the same level. I’m not picking on Finance here. I need to understand forced growth from non-forced growth.
Thank you, Mr. Dolynny. Deputy Minister Aumond.
Thank you, Mr. Chair. As I indicated earlier, we did receive forced growth of $943,000 for collective bargaining. I also mentioned that we had some unfunded positions that we were funding from other sources that what we did is we moved the money out of that area into compensation and benefits where it was not reflected before. To be clear, the employee count was there last year. It’s just the source of the compensation and benefits was not showing up in compensation and benefits, so we did that. There were seven positions for a total of $940,000 that that accounts for.
In addition to that, we did some reallocation given that, as Members may know, that when positions are funded, if they’re new funded, they get funded to 23 percent benefits. Many of the old positions or most of the old positions were funded at 17.5, and as a result of that, given that the size of the Department of Finance over the last two fiscal years nearly doubled in size of the department, we couldn’t afford, really, to continue on that way. So, again, we reallocated some money to move that 17.5 percent to 23 percent, and that was for a total of $984,000.
As well, recognizing that we also had, as a result, some positions that changed in terms of either they were changed in the evaluation or they changed completely for an additional about $170,000. That’s really the accounting for the difference in the $3.26 million, an increase of compensation from last year’s main estimates to this year’s proposed main estimates.
The fog is starting to lift here. I’m seeing some of the numbers more clearly in that perspective and I appreciate the deputy minister’s response to that. I guess the question remains right now, as we speak, how many positons are currently vacant in the Department of Finance?
I don’t have that total with me right now, but I do believe our vacancy rate is somewhere around a corporate average of around 10 percent or so.
With these vacancies, which sounds like it’s around the corporate average of 10 percent, and I’m assuming these are funded positions, I guess to the question, do those monies remain in that activity or has the department used those monies in other facets during the course of the year? Or is this money allocated for these positions? Do they stay within the category of wages and benefits?
With what’s proposed in the ’15-’16 Main Estimates the department will no longer have any unfunded positions. All the money that is proposed here, the compensation and benefits will be for the full 265 positions.
Historically, has the Department of Finance ever, with unfunded or funded positions, moved any money or appropriated the money by taking it out of this category of compensation and benefits and used it in other areas within the Department of Finance in historical purposes? Thank you.
Mr. Chair, when we fund summer students out of vacancies, generally we have not used money for compensation and benefits out of vacancies for other purposes. As the Member knows, we explained when we were in business plans, we did a reallocation out of some funds for other O and M that were traditionally used for compensation and benefits, and what we’re proposing to do here in this budget is show that money in compensation and benefits so we can chew that budget up. Thank you.
Mr. Chair, just so I’m clear before I leave this activity, is that we know under current FAM policy that the department, under the guidance of the Minister or deputy minister, was allowed to move up to $250,000 of unallocated, unused funds, funded positions, and move them to another activity without having to get the proper appropriation of the House. Was this activity done in the last fiscal year? Is that reflected at all in the increased potentially we are seeing in this category over and above main estimates? Thank you.
Thank you, Mr. Dolynny. Minister Miltenberger.
Thank you, Mr. Chair. There is an ability to move funds between activities. There is a report that’s done on a regular basis, interactivity transfers where we have to account for all the money that’s moved, how it’s moved and to ensure that it’s moved appropriately. Thank you.
Thank you, Mr. Miltenberger. Committee, we’re on page 149, Finance, active position summary. Are there any questions?
Agreed.
Page 151, Department of Finance, budget, treasury and debt management, operations expenditure summary, $26.860 million. Ms. Bisaro.
Thank you, Mr. Chair. I just have a question here with regards to the Program Review Office. I note in the description that the PRO is responsible to… They have formularies of business. One of them is to report on results with a view to recommending modifications or improvements. I think it’s been mentioned once or twice in our discussions of the budget to date, but I’d like to know from the Minister if there is any consideration on the part of the department to make the Program Review Office recommendations binding on departments. Is that something that the Finance department is considering instituting? Thank you.
Thank you, Ms. Bisaro. Minister Miltenberger.
Mr. Chair, no, we haven’t contemplated their recommendations being binding. They would cease to be recommendations and that would eliminate all room for discussion or creativity. They may give us a set of recommendations based on what they know. We need the flexibility, as well, to be able to look at those. As we look at the information, we are sharing with committee as well. If they’re binding, it takes away all of our flexibility. I don’t know if we necessarily want to do that. Thank you.
Mr. Chair, thanks to the Minister. I guess it kind of makes me want to ask the question then, of why did we bother having the Program Review Office to give us recommendations, but I say that with a bit of tongue in cheek. If the department gets these recommendations from the Program Review Office, how are they handled? How does the Minister ensure that other departments at least consider them? The goal here is to try and determine program effectiveness I read on page 150, which presumably should lead us to some efficiencies as well. If we have recommendations and they’re not binding, how do the Minister and department work to try and get some gains out of the programs and services that we run through the recommendations from the PRO? Thank you.
Mr. Chair, I am just harking back to the last government where there was a lot of work done on looking for savings and efficiencies. It took almost two years of discussion and debate. When there was a move to act on recommendations, we acted partially on some of the recommendations, not all. There was significant pushback from MLAs when we talked about inclusive schooling and people-teacher ratio, for example, and the re-profiling the overfunding that was going on at the time. When we moved to act on it, it was a hugely contentious issue, which I suppose speaks most clearly to the issue of what would happen if you made all of those recommendations would have been binding on all of us. There would have been some significant change to government. We would have given away our ability as final arbitrators on the budgets and structure of government, and I don’t think that’s the intent of the Program Review Office.
When we get the Program Review Office assisting work, it does things besides reviews. It assists in all sorts of other things. We have to look at what the recommendations are. Are they structural issues? Are they process issues? Are they finance issues? Are there overlap issues? There’s not a straightforward answer. It depends on the recommendations. I will ask the deputy if he wants to add anything further to that response. Thank you.
Thank you, Mr. Miltenberger. Deputy Minister Aumond.
Thank you, Mr. Chair. The Minister did write a letter to standing committee committing the Program Review Office to, I guess, first of all just twice a year give them an update on the activities of the section. Departments will bring their business planning cycle and now have to be able to, and will be able to, discuss what they’re doing with the program reviews as a result of the recommendations of those reviews to the business planning process to be able to see the changes that will be implemented by the departments to their programming or, conversely, why they chose not to do that, and the recommendations will be provided to standing committee at that time so that everybody will have that information when the departments’ business plans are reviewed in standing committee. Thank you.
Thank you, deputy minister. Ms. Bisaro.
Mr. Chair, thanks for the information. I certainly look forward to seeing the reports twice annually. I think that’s a very good step forward. I want to thank the Minister for his commitment to committee.
It is my understanding that the Program Review Office has been doing a review of student housing. I think it goes back to almost a year ago now. Can the Minister advise whether or not that review is finished, and if not, when it will be? Thank you.
Thank you, Ms. Bisaro. Mr. Kalgutkar.
Thank you, Mr. Chair. Yes, I agree with the Member that the review has been delayed a little bit, but we have made significant progress in the last few months. With the department, a draft report has been finalized and will be going to deputy ministers and Ministers for review by the end of this month, I believe, and then the summer report mitigated to standing committee. Thank you.
Thank you. Next on my list I have Mr. Dolynny.
Thank you, Mr. Chair. We know that this category involves the insurance, basically the risk management of the GNWT. We know that in the past we continuously have heard that there’s a change in our Risk Management Framework, which I would assume would affect how we calculate our premiums for our insurance evaluation assessment. We know that when we’ve done this in the past, large items of infrastructure such as the Deh Cho Bridge and Inuvik school were slow to get trickled on to our insurance line. So with that, and because I have yet to see a document of our Risk Management Framework publicly, even as a Member, and yet we know we have a lot of large-scale inventory of infrastructure coming on board, I question the very small, in fact, no increase in insurance premiums for this fiscal year. If I can maybe get an explanation, if we are indeed putting these large-scale pieces on our books, wouldn’t premiums go up at the same percentage? Thank you.
Just for some clarification, I think the Member is referring to the Risk Management Framework that the Comptroller General’s office has been working on with the Audit Bureau and the Program Review Office. That’s a review with each department’s identification of their risk areas in terms of delivering their programs. As Members will recall, that’s really a three-step process. The first process, which is done now, is for departments to complete a very high-level assessment of the risk areas that are within their departments. The second process, which departments are just finalizing right now, is a detailed risk management assessment of their department. Then the third process is completing the corporate risk management summary. So that process is ongoing and we continue to work on that.
The other risk management area that we are working on is the area that I believe the Member is referring to, and that’s our insurance premiums which are within the Department of Finance. Our premiums have gone up a little bit from the last fiscal year by about $200,000. A significant reason for that is because we did take on some new capital projects that came into service, so our premiums did go up a little bit because of that. The current budget for our premiums is $2.2 million. Thank you.
I appreciate the clarification on risk management, but the question still remains. In 2013-2014 we were at $2.218 million. We had $2.305 million in the main estimates of 2014 and zero increase in 2015-2016. As I said, we had a significant amount of infrastructure that hit our books, which means that in the last two years, no change. In fact, there’s only a change of $87,000 since 2013. I find that premium very weak, given the amount of infrastructure that this has assumed in liability. Can I get more clarification on that? Thank you.
The Member is totally right; our insurance premiums have gone up from the previous fiscal year by $200,000. The reason, as he has indicated, was we did bring on some significant assets into service and within the last two fiscal years. We were able to mitigate the increase quite a bit by implementing what we’re calling the Property Replacement Appraisal Plan. So what the department has done is work very closely with our primary insurers and to have a very detailed review of the replacement cost of our assets and that`s what has kept our premiums down. Thank you.
I guess the rationale for my questioning is that sometimes in business the quickest fix to find money is to go lean on insurance and do a re-evaluation of your replacement costs and depreciate those costs to the tune where it makes it very difficult to make that investment. I’m just hoping that we as a government are maintaining the right level of insurance for the amount of assets we have coming on our books. That’s my rationale for the question, Mr. Chair.
We know that this area of the activity is involved with debt management. With that, we know that the Macroeconomic Policy, which is used as a guideline force for the department, is a very strong piece of policy and documentation. I have to clearly indicate that this is a very old and very outdated Macroeconomic Policy that we’re using. We’re using assumptions that were pre-recession in order to guide the debt management of our government and that, in turn, will also affect our Fiscal Responsibility Policy which again, if I go on the department`s website, there’s only a reference to a pamphlet. That pamphlet still has the picture of Mr. Floyd Roland on it, which tells me that this thing needs to be looked at. This is quite old and yet all these tools, very old Macroeconomic Policy and old Fiscal Responsibility Policy, provide the oversight for our fiscal strategy.
When can we start to see maybe a modernization of these tools and update of these tools so that we can have some degree of confidence that we’re not using outdated management tools to make the predictions that we’re needing to look at borrowing more money? Thank you.
Thank you, Mr. Dolynny. Mr. Miltenberger.
Thank you, Mr. Chairman. These policies are going to be reviewed, renewed and updated, modernized this year and in place and time for the next budget. Thank you.
Thank you, Mr. Miltenberger. Mr. Dolynny.
Thank you, Mr. Chair. I am encouraged with that response. I know I’ve asked that many times. I guess we’ll have it before the end of the 17th, which is better late than never. So, congratulations to the department for recognizing that opportunity, because Members have been asking for that for some time.
Last, Mr. Chair, with respect to this activity. The treasury division looks after the administration of all legislative tax programs and I guess to the question and, again, I do applaud the good work that has been done in terms of increasing the frequency of tax audits, especially on tobacco, but how many tax audits are we going to be doing on outside wholesalers? These are wholesalers that are outside the GNWT’s jurisdiction, such as outside the Northwest Territories. How many of these wholesalers will be audited for the transfer of the tax memo program for our GNWT portion in our fiscal year?
Thank you, Mr. Dolynny. Mr. Kalgutkar.
Thank you, Mr. Chair. For the ‘14-15 audit plan, we had anticipated conducting audits on four of our 11 tax wholesalers. We’ve completed one of them and we hope to complete the other three by the end of the year or early in the new fiscal year. Thank you.
I appreciate that response. So, for the sake of fullness here, four out of the 11 outside wholesalers, these are wholesalers that are established outside the border of Northwest Territories. Is this the first time that this government has audited these outside wholesalers? Thank you.
Yes, that is correct.
I want to congratulate the department for finally realizing where I firmly believe there are issues with respect to our loophole in our taxation system, so I’m going to be looking with much anticipation of the results of that audit. Can the department indicate how the findings of this audit will be made to Members and how will the findings of this audit will be made public? Thank you.
Typically the government doesn’t produce our audit findings. Thank you, Mr. Chair.
So, how will Members know the findings of this audit? Thank you.
One of the things we could possibly look at is doing a fairly high-level summary of what the results are, but we would not be able to identify who the wholesalers are. Thank you, Mr. Chair.
Thank you, Mr. Kalgutkar. Committee, we`re on page 151, Department of Finance, budget, treasury and debt management, operations expenditure summary, $26.860 million.
Agreed.
Page 153, budget, treasury and debt management, active positions. Questions?
Agreed.
Page 155, Bureau of Statistics, operations expenditure summary, $1.069 million.
Agreed.
