Mr. Chair, I move that Tabled Document 1-18(2), Proposed Mandate of the Government of the Northwest Territories, 2016-2019 be amended on page 11 by inserting the words “We will reduce taxes on small businesses.” Thank you, Mr. Chair.
A motion is on the floor. The motion is now being distributed. The motion is in order. To the motion. Mr. Testart.
Thank you, Mr. Chair. In times of economic uncertainty, it is incumbent on this government to provide support to the areas of our economy that work hard to support the activities in our community, create jobs, and continue to provide economic boosts to our local economies. A tax cut on small business is exactly the kind of thing we need to start looking at and start implementing to encourage business growth and to further diversify our economy. This is a small measure, but it will go a long way in helping those who work hard.
Many of my constituents and voters during the election raised this issue, that it was getting much too expensive to do business in the North, and we need to start realizing opportunities for them to save money on their operations and further support employment in the private sector, which of course withstands the boom-and-bust cycle that has limited our ability to maintain government spending at the level that previous Assemblies enjoyed. We do need to do more to diversify our economy to support the private sector and this amendment to the mandate provides certainty and clarity to our business community and to the residents of the Northwest Territories that we will in fact support economic diversification and support hard-working northern businesses. Thank you, Mr. Chair.
Thank you, Mr. Testart. I'm seeing no more names on my list. To the motion. Premier McLeod.
Thank you, Mr. Chair. The Government of the Northwest Territories offers a wide range of programs to assist entrepreneurs get established and grow their businesses. For example, Industry, Tourism and Investment has a network of regional offices staffed by experienced, well-trained economic development officers who assist and advise small businesses on a daily basis.
One of the key functions is to recommend funding sources such as the Support for Entrepreneurs and Economic Development, better known as the SEED policy for contributions or community futures, and the Business Development and Investment Corporation for loan financing. SEED in particular is very flexible and can provide funding for a diverse range of activities from developing business plans, marketing, purchasing equipment, visiting trade shows, and business networking. These programs do not just support start-ups but can assist the business at every stage of their operation. Industry, Tourism, and Investment also offers very specific sector programming. For example, tourism operators can access funding under the Tourism Product Diversification and Marketing Program to expand their businesses and market their programs. Agriculture programming can also pay for bringing land into production or capital equipment, or subsidize the delivery or products to customers in other communities. In the fisheries sector, Industry, Tourism, and Investment is working with fisheries to revitalize the Great Slave Lake fishery. A manufacturing marketing plan is creating awareness of manufacturing opportunities in the Northwest Territories.
In addition, regional offices conduct workshops throughout the year related to every stage of the business cycle. The Business Development and Investment Corporation also maintains both a physical and online business resource centre that is a resource on a wide range of relevant topics for individuals and businesses. There is a suite of support systems for small businesses provided by the government. Thank you, Mr. Chair.
Thank you, Premier McLeod. To the motion. Minister McLeod.
Thank you, Mr. Chair. Mr. Chair, a one per cent reduction in small business rate is equivalent to about $700,000 in revenue in the total GNWT, as I've been saying the last little while, that is used to fund programs and services are projected to decline over the next five years. The reduction itself would only impact a small number of businesses in the NWT, and this reduction would not cause anyone to start a small business. The number of small businesses operating in the NWT has been declining over the last few years due to various factors impacting our regional economies, for example down in the Sahtu, due to the downturn in the oil and gas industry. We should be looking at providing direct support to small businesses through grants and contributions, rather than lower taxes as small businesses that require government support do not have large revenue or large profit, and hence do not pay a lot, if any, corporate tax. We've heard a few times from some of the Regular Members that one of the options that they would like to see is to increase the taxes rather than reduce them to help offset any revenue loss. Thank you, Mr. Chair.
Thank you, Minister McLeod. To the motion. Mr. Vanthuyne.
Thank you, Mr. Chairman, and with respect to the previous speaker's comments, I'd like to indicate that, as a small business owner, I'll find myself in support of the motion. More and more we're seeing in the North small businesses are seeing growing overheads, I am grateful for the current GNWT entrepreneurial support. That's certainly greatly appreciated. However, a tax reduction will be supportive of small business revenue growth, and that ultimately supports hiring and training and again, supports economic growth. I see this as an incentive for the growth of small business and I will be in support. Thank you.
Thank you, Mr. Vanthuyne. To the motion.
Question.
Question has been called. I would call upon Mr. Testart to conclude the motion.
Thank you, Mr. Chair. Of critical importance is, although only a small number of businesses would benefit, there are only a small number of businesses in the Northwest Territories to begin with, and that's exactly the kind of thing we need to start changing. I thank the Premier for outlining some of the programs we currently have to support entrepreneurs and private sector enterprises. Those are good programs and they should be expanded. Although this tax relief measure will result in lessened government revenues, it is something we can definitely afford, and again, we need to provide a plan for economic recovery and tax relief for our business community, especially our small business community. This is exactly the kind of strong signal we need to send: That the North is open for business and is investing in our private sector. I encourage everyone to support this motion as we move forward to concluding this mandate. Thank you, Mr. Chair.
Thank you, Mr. Testart. All those in favour? All those opposed? The motion is carried.
---Carried
Mr. Testart.
Thank you, Mr. Chair. Mr. Chair, I move that Tabled Document 1-18(2), Proposed Mandate of the Government of the Northwest Territories, 2016-2019, be amended on page 13 by inserting the words “We will review and develop amendments to the Northwest Territories Heritage Fund Act in light of devolution to ensure a defined revenue stream and stronger public governance.”
Thank you, Mr. Testart. The motion is on the floor and is now being distributed. The motion is in order. To the motion. Mr. Testart.
Thank you, Mr. Chair. The Heritage Fund is an excellent way to keep a resource wealth here in the Northwest Territories for the use of future generations. One of the items of the transition report of the last Assembly was to do work on the Heritage Fund Act to do exactly what this amendment calls for: To create a defined revenue stream and stronger public governance of the fund. Right now, the revenue stream going into the fund is more or less defined by an agreement from the Minister of Finance, and it is the opinion of many that this needs to be looked at and defined by legislation so there is a reliable flow of cash into the Fund that can be used to generate stronger dividends for use by this government going forward.
We are looking for revenue options and the Heritage Fund, if properly utilized, could be a way to create those dividends we need to expand our revenues and, again, keep our resource wealth in the Northwest Territories for the use of future generations. This amendment will allow this government to move forward on this and propose the kinds of amendments we need to make this source of additional revenue possible. Thank you, Mr. Chair.
Thank you, Mr. Testart. To the motion. Mr. O'Reilly.
Thanks, Mr. Chair. I note that in the proposed mandate, on page 13, the same section that we're talking about, there is a long list of legislation that the Cabinet has proposed that we review in light of devolution. They include a new Mineral Resources Act, the amendments to the Northwest Territories Mining Regulations, the NWT Lands Act, the Commissioner's Lands Act, the Territorial Parks Act, the Petroleum Resources Act, the Oil and Gas Operations Act, the Waters Act, the Environmental Protection Act, and the Forest Management Act.
That's a good list, but I don't understand why the review of the Heritage Fund Act was not included in this section. It's something that was certainly raised to me during the election as a constituent. I mentioned it in this House as part of the priorities that I ran on in the election. This has been an interesting ongoing debate, I know, in this House because every budget, it's decided how much, if anything, to actually put into the Heritage Fund. Basically, it's completely discretionary, done on a case-by-case, year-by-year basis. With devolution, we are now at a point where we are beginning to collect some of our own resource revenues, and with an increased revenue stream coming into the territorial government, we need to look at how and how much we should be devoting on a regular basis into the Heritage Fund.
Other jurisdictions have grown these over time. Alberta is not exactly a great example, but certainly, the Norway Pension Fund is now over a trillion dollars. They ensure that all of their resource revenues go into that fund. They actually have state ownership in the oil and gas sector as well, that helps put that money into the fund, but it’s provided a great deal of stability to the economy in Norway and allowed them to actually surpass Canada in terms of their standard of living. I’m not suggesting that we need to immediately jump to the kind of fund that Norway has, but in light of these new responsibilities that we have inherited, we do have a duty to ourselves and our future generations to improve upon what's in that act, make sure that there’s a defined revenue stream going into the fund, and also look at how it should be governed. Right now, it is governed through the Financial Management Board, which is fine, but most other funds that are set up in other jurisdictions have a much stronger element of public governance, even arm’s-length in some cases, so that the way that those funds are invested are reviewed on a regular basis. Some funds actually establish environmental and social screens on how the money is to be invested.
I think that would be something wise and something that we may want to consider at some point, but to not have it appear in the mandate, I think, is not the way that we should be going in light of devolution. If we are going to be looking at all this other legislation, let's make sure that we also look at the Heritage Fund Act as well. Thank you, Mr. Chair.
Thank you, Mr. O’Reilly. To the motion. Mr. Nadli.
Thank you, Mr. Chair. I, too, speak in support of this motion. In the 17th Assembly, I think we laid some fundamental roots of at least the initiative that is before us today. My colleague had made reference to the Norway model in terms of the Heritage Fund, and just the gains in terms of the investment, in terms of ensuring that there is indeed a Heritage Fund out there that perhaps could be seen as a legacy fund as well. It’s an investment fund to ensure that we do set aside some of the revenues that we generate from these large natural resource projects, that they are invested for the future.
The point has been made in terms of ensuring that we do have a very strong governance model to manage the Heritage Fund, ensuring that the model is strong. At the same time, there is a monitoring capacity that is report mechanisms, also at the same time ensuring that it's transparent and it has at least a reflection of public input, and at the same time ensuring that the investments that we generate and set aside are secured.
The other point I want to make is, of course that the motion highlights that we need to ensure that we have a revenue stream that is channelled into this Heritage Fund, and that we make it possible. I believe this motion speaks to that, so I will vote in favour of this. Mahsi.
To the motion. Minister of Finance.
Thank you, Mr. Chair. Mr. Chair, the Heritage Fund Act was enacted on August 1, 2012, and the legislation establishes a trust fund as a long-term investment in which surplus funds typically received from resource royalties may be transferred at the discretion of a Legislative Assembly. Once transferred, these funds become part of the principal of the Heritage Fund. Under the Act, for the first 20 years once first contribution is made, both the principal and the interest, or the income generated by the fund, are retained in the fund. After 20 years have passed, transfers out of the fund for use by the GNWT may be made through the creation of a special act, in addition to going through the standard budget appropriation processes. The current act limits the transfers out of the fund to an annual withdrawal of five per cent of the year-end balance of the fund, provided that the principal of the fund is not removed. In other words, all contributions to the fund can never be removed and moved by the Legislative Assembly for any purpose. Only the interest income can ever be withdrawn and appropriated by the Legislative Assembly.
Because resource revenues are volatile and unpredictable, the 17th Legislative Assembly decided not to include these revenues to fund operations and maintenance or ongoing programs and services from net fiscal benefit from devolution. The 17th Legislative Assembly instead decided through the budget review process to invest 25 per cent of the GNWT's net fiscal benefit from devolution into the Heritage Fund and the remaining 75 per cent in infrastructure. Because the NWT has been in a cash deficit program for the last number of years, the GNWT had to incur short-term borrowing costs to meet this obligation. Since the start of the fund in 2012-2013, we have paid over $41,000 in interest costs related to these payments. I would agree that discussion of how much of any further contributions to the Heritage Fund the GNWT should continue while the GNWT is in a cash deficit position would be worthwhile. We have heard in the Assembly that investment in infrastructure such as Mackenzie Valley Highway, the road to the Slave Geological Province, and an all-weather road to Whati. Our priorities are needed to grow our economy and reduce the cost of living. We also need to invest in infrastructure to provide required services to our residents, such as schools, health facilities, public and seniors' housing, airports, parks to support tourism, and maintenance of our existing highways.
If we want to undertake these investments in a reasonable time frame, we need to have the financial resources to pay for 50 per cent of these investments from within our own revenues, under our Fiscal Responsibility Policy. Again, discussion on how much of the NWT fiscal benefit from devolution should be invested into the Heritage Fund and how much should be invested in infrastructure is something we should engage on. Should we enshrine a certain level of investment in legislation or should we let each Assembly decide based on its own objectives the fiscal situation it finds itself? These are all things we should discuss.
With respect to the independent or arm’s-length management and administration of the NWT Heritage Fund, the current act does not prevent this from happening. But while the fund is new and still in a modest balance of $5.5 million, the value of benefit would outweigh the cost of such third-party management and administration. Although the interest earned by the fund could be used to pay these costs, the estimated interest earned for 2015-2016 is only $37,000, and likely not sufficient to pay for costs of third-party management. Initial feedback from fund managers indicates that fees on a $6 million fund would range from $45,000 to $75,000 per year, depending on the level of monitoring we want them to do. Having said this, the Legislative Assembly does receive an annual report on the performance of the fund as part of the GNWT Public Accounts. I tabled the 2014-2015 Public Accounts in this Assembly yesterday. The annual financial statements of the fund are included in section 3. The current act includes a requirement for the Legislative Assembly to conduct a review, after 10 years of the provisions and operations of the act, including recommendations on how to seek public input and advice on expenditures for the Fund and whether independent oversight and management of the fund is required.
I would encourage the Standing Committee on Priorities and Planning to entertain a detailed briefing on the act to ensure it fully understands the act's provisions and to engage in a detailed discussion on what is the best path forward, given there is legislative requirement for a comprehensive review of the act in 2022. Thank you, Mr. Chair.
Thank you, Mr. McLeod. To the motion. Seeing no one else on my list, I will call on Mr. Testart to close debate on the motion.
A recorded vote has been requested. All those in favour, please stand.
Mr. Testart, Mr. Nakimayak, Mr. Beaulieu, Mr. Thompson, Mr. O'Reilly, Ms. Green, Mr. Nadli, Mr. Vanthuyne, Mr. Blake.
All those opposed, please stand.
Mr. Moses; Mr. Abernethy; Mr. McLeod – Yellowknife South; Mr. McLeod – Inuvik Twin Lakes; Mr. Schumann; Mr. Sebert.
All those abstaining, please stand. The results of the recorded vote are nine in favour; six opposed; zero abstentions. The motion is carried.
---Carried
Are there any more comments on the “Economy, Environment and Climate change” section? If not, would the committee agree to return to the “Cost of Living” section?
Agreed.
Do the Members have any comments or question for the cost of living section? Mr. Thompson.
Thank you, Mr. Chair. Mr. Chair, I move that Tabled Document 1-18(2), Proposed Mandate of the Government of Northwest Territories, 2016-2019, be amended on page 20 by deleting the words, “There is potential for development of expanded hydro capacity while at the same time better diversifying our energy resources with solar, wind and biomass,” and inserting the words, “There is potential to expand hydroelectric capacity and diversify energy production with solar, wind, biomass and geothermal resources.”
A motion is on the floor. The motion is in order. To the motion. Mr. Thompson.
Thank you, Mr. Chair. This is just to be consistent throughout the document. We talk about solar, wind, biomass, and geothermal in other areas, so it is to be consistent with it as well. Thank you, Mr. Chair.
Thank you, Mr. Thompson. To the motion.
Question.
Question has been called. I'll call on Mr. Thompson to conclude debate on the issue.
I've said enough. Thank you, sir.
All in favour? All those opposed? Motion is carried.
---Carried
Are there any more comments or questions on the “Cost of Living” section? Mr. O'Reilly.
Thanks, Mr. Chair. I have one further amendment I’d like to propose to the mandate document. I move that Tabled Document 1-18(2), the Proposed Mandate of The Government of the Northwest Territories, 2016-2019, be amended on page 21 by deleting the words “We will provide incentives for residents to invest in energy efficient products, help businesses, condominiums and co-operatives make investments in energy conservation and energy efficiency, support residents and communities so they can make investments into renewable energies such as solar, and improve the energy efficiency of public housing,” and inserting the words “We will expand and improve access to incentives for residents to invest in energy-efficient products; help businesses, condominiums and co-operatives invest in energy conservation and efficiency; support residential and community investment in renewable energy such as solar; and improve the efficiency of public housing.”
Thank you, Mr. Chair. We seem to be missing the second part of that, but it’s exactly the same, as I understand it.
Thank you, Mr. O’Reilly. We'll take a very short recess while the clerks get that motion out. Two minutes.
---SHORT RECESS
Thanks, Mr. Chair. I move that Tabled Document 1-18(2), the Proposed Mandate of The Government of the Northwest Territories, 2016-2019, be amended on page 21 by deleting the words “We will provide incentives for residents to invest in energy efficient products, help businesses, condominiums and co-operatives make investments in energy conservation and energy efficiency, support residents and communities so they can make investments into renewable energies such as solar, and improve the energy efficiency of public housing,” and inserting the words “We will expand and improve access to incentives for residents to invest in energy-efficient products; help businesses, condominiums and co-operatives invest in energy conservation and efficiency; support residential and community investment in renewable energy such as solar; and improve the efficiency of public housing.”
Thank you, Mr. O’Reilly. A motion is on the floor. The motion is in order. To the motion. Mr. O’Reilly.
Thank you, Mr. Chair. For those that are listening, or are going to read this in the Hansard, the difference here is we’re changing the wording that was in the tabled document from “provide incentives” to “we will expand and improve access to incentives.” That’s the key difference here. Just a little bit of an explanation. The original wording says, “provide incentives.” We already do that through the Arctic Energy Alliance, so I don’t think this really represents any kind of innovation or change in any way, and I think what I heard, certainly, during the campaign and from a number of constituents is that we should be looking to improve access to incentives to make them more widely available, particularly to lower-income families, but also perhaps, other communities as well, and that we shouldn’t just improve access, but we should actually expand incentives.
I’m sure we’ll have an interesting discussion around what that means as well, but the idea here is that energy efficiency is one of the main ways that we can actually reduce the cost of living for our residents. We should always be doing our best to improve energy efficiency. Arctic Energy Alliance does offer some amazing programs and I think the objective of this change is to ensure that we can do a better job with our residents to lower the cost of living through energy efficiency. Thank you, Mr. Chair.
