Thank you, Mr. Chair. I am here to present Bill 21, An Act to Amend the Northwest Territories Business Development and Investment Corporation Act.
The NWT Business Development and Investment Corporation, or BDIC, is a territorial Crown corporation that was established in 2005 to promote and maintain economic development and employment.
While the corporation generates substantial income from its investments and loans, it is currently prohibited by its act from using this income to fund its operations.
Instead, the BDIC relies on the Government of the Northwest Territories and some third-party funding for its operating expenditures.
We are proposing amendments to allow BDIC, with the Minister's approval, to use interest and dividend revenue that it receives to cover shortfalls in its operating budget. This would allow the Department of Industry, Tourism and Investment to reduce its annual contribution to BDIC, while enabling the corporation to sustainably continue operating.
ITI has been exploring a variety of options for increasing the BDIC's efficiency and effectiveness in advancing the economic objectives of our government.
In response to concerns expressed by Members of the Legislative Assembly during their review of the 2018-2019 Main Estimates, the department is proceeding with this amendment immediately to ensure that the BDIC has the appropriate long-term sustainability that it requires.
This concludes my opening remarks. Thank you, Mr. Chair.
Thank you, Minister. Minister, would you like to bring witnesses into the Chamber?
Thank you, Mr. Chair.
Sergeant-at-Arms, please escort the witnesses into the Chamber. Minister, please introduce your witnesses.
Thank you, Mr. Chair. On my immediate right is the director of finance and administration for the Department of ITI, Julie Mujcin. On my right is Department of Justice legislative drafter, Doug Ward. Thank you, Mr. Chair.
Thank you, Minister. I will now open the floor to general comments on Bill 21. Recognizing Mr. Vanthuyne.
Thank you, Mr. Chair. Mr. Chair, as the Minister noted, BDIC has a number of economic development programs from providing businesses support services to running its own subsidiaries. One of the most popular programs is the credit facilities program, which disbursed $6.2 million in 2016-2017, part of a growing portfolio of $47.3 million. The program provides for key credit facilities; loan facilities, standby letters of credit, guarantees, credit risk management, and interest rebates. These initiatives help NWT business start-ups as well as establish businesses to grow. This program also generates interest for the BDIC.
There is no doubt that BDIC is a critical organization that nurtures entrepreneurship in the NWT. To continue to diversify our economy, we need to support organizations that help budding entrepreneurs get their businesses off the ground and expand them across our communities.
BDIC is largely funded by the Department of Industry, Tourism and Investment. However, since 2015-2016, following government-wide fiscal restraint policies, ITI has been reducing its contributions. Funding flowing to BDIC has been reduced by half in four years from $3.8 million in 2014-2015 to $1.9 million in the current fiscal year. At the same time, BDIC has accumulated a significant amount of money in interest earned over its lifetime, but the current Northwest Territories Business Development and Investment Corporation Act forbids BDIC from using its loans and investment funds to fund its own operations.
During the most recent ITI business plan review, EDE expressed concerns over the reduction in funding to BDIC and potential impacts on program delivery. Pursuant to Clause 41 of the NWTBDIC Act, a five-year program review is required and this is currently under way. While ITI expected amendments to the act following program review, EDE recommended that amendments to the act be brought forward sooner to allow for BDIC to use some of its interest revenue to fund its operations now and, therefore, maintain the sustainability of its programs.
Mr. Chair, Bill 21 is a targeted bill that proposes to amend the NWTBDIC Act to allow for BDIC to use its interest revenues to fund operations. Bill 21 further adds ministerial approval requirements when an operating budget proposes to use part of the interest revenue and adds reporting requirements to account for these changes. Once the current five-year review is completed, EDE will assess the outcomes and make additional recommendations as needed. These may result in further amendments to the act.
Mr. Chair, Bill 21, An Act to Amend the Northwest Territories Business Development and Investment Corporation Act, proposes small amendments to address immediate needs that I think are critical for the full and uninterrupted delivery of BDIC's programs. I also want to thank the department for their expedience on this bill. Members are welcome to ask questions of the Minister as they see fit.
Those are my comments. Thank you, Mr. Chair.
Thank you, Mr. Vanthuyne. Any further comments? Mr. O'Reilly.
Thanks, Mr. Chair. I would like to ask the Minister how he sees himself exercising his discretion over the operating budgets that the corporation may put forward that start to use some of that interest. I see in the act that is his authority set out in Clause 5 of the bill. Can he just tell us how he anticipates exercising that ministerial authority? Thanks, Mr. Chair.
Thank you, Mr. O'Reilly. Minister Schumann.
Thank you, Mr. Chair. What I see and what we have been doing is, through their corporate planning process, when they come forward, I work with the management of the BDIC and work with them on their corporate plan with their strategic plan going forward. Thank you, Mr. Chair.
Thank you, Minister Schumann. Mr. O'Reilly.
Thanks, Mr. Chair. That was almost going to set a record for the shortest answer ever, but it didn't really provide any detail. What kind of criteria or what is the Minister looking for when he is going to be reviewing this use of interest funds? He has total and unfettered discretion here, so what is he going to be looking for in approving use of these funds by BDIC? Thanks, Mr. Chair.
Thank you, Mr. O'Reilly. Minister Schumann.
Thank you, Mr. Chair. We need to operationalize this. What we want to do is: when we do the review, we want to look at their operations and how they are doing things within their operations. Through this review that we are going to be conducting with them, which we will be presenting the term of reference probably shortly to committee or once we have all the information pulled together and hope we are going to have that in the next couple of weeks or so, we will be able to review how they operationalize their operation. That is how I will be conducting it. Thank you, Mr. Chair.
Thank you, Minister Schumann. Mr. O'Reilly.
Thanks, Mr. Chair. If I wasn't confused before. I am going to read the provision in the bill and I would like the Minister then to tell me how he is going to exercise this authority.
"The Minister may approve an operating budget of the corporation for the financial year that designates a portion of the amount of money received by the corporation in interest during the previous financial as money that is available to the corporation for the purpose of carrying on its business."
What criteria is the Minister going to use in deciding whether to approve that budget that is going to come forward from BDIC that might use some of the interest that it has accrued? Thanks, Mr. Chair.
Thank you, Mr. O'Reilly. Minister Schumann.
Thank you, Mr. Chair. To that specific clause, we want BDIC to lay out their capital plan on how they are going to use their interest and revenue and what portion of that is going to be used for their operational plan. These are early days, as I have said. This is some of the stuff we are proposing that we want to do going forward. With this legislation, we want to be more transparent on how they use their money. Thank you, Mr. Chair.
Thank you, Minister Schumann. Mr. O'Reilly.
Thanks, Mr. Chair. I am all for transparency, as well. Can the Minister then commit to share his decision on this with committee so that we know how he has exercised his discretion, whether he has approved the request by BDIC and, if he hasn't, the reasons why he has turned it down? Can he share that information with committee? I know this is a new thing. In the interest of transparency, can he share that with committee moving forward? Thanks, Mr. Chair.
Thank you, Mr. O'Reilly. Minister Schumann.
Thank you, Mr. Chair. Every corporate plan will be tabled in the House, and it will show the breakdown on how they are using this money, so it's going to be fully transparent and will be shared. If it's tabled in the House, everybody will be able to have a look at it. Thank you, Mr. Chair.
Thank you, Minister Schumann. Mr. O'Reilly.
Thanks, Mr. Chair. Yes, I don't want to flog a dead horse here, but what gets tabled in the House, though, that is only after the Minister has approved it, presumably. So I want to know whether the Minister has actually approved the request by BDIC, the full request, or not, so can the Minister share that kind of information with standing committee? If it has to be done on a confidential basis, that is fine. I just want to know how this is going to operate the first couple of years. Thanks, Mr. Chair.
Thank you, Mr. O'Reilly. Minister Schumann.
Thank you, Mr. Chair. I suspect we can share that during the business planning sessions as we go forward and be able to do it through that process. Thank you, Mr. Chair.
Thank you, Minister Schumann. Mr. O'Reilly.
Okay, thanks. I appreciate that, and I am sure the Minister will remind me if I forget about it and do not raise it during business planning review. I just have one other comment that I want to make. I agree with my colleague who chairs the Standing Committee on Economic Development and Environment, the MLA for Yellowknife North, because I sit on the committee, as well. The reason why this is coming forward is because of Cabinet's fiscal strategy of cutting programs and services to fund infrastructure. So they have cut the funding that comes to BDIC by $1.9 million over two years to meet fiscal reduction targets, so that is why this is coming forward at this point, because they have been cutting BDIC and this is a way to try to help them out of that hole. Thanks, Mr. Chair.
Thank you, Mr. O'Reilly. Minister Schumann.
Thank you, Mr. Chair. Normally, I would have probably let that one slide, but I am not going to. This is not a fiscal reduction to meet infrastructure needs. This was a way that we moved to prudently manage the money of the Northwest Territories so we could help facilitate and move forward on all policies and needs of the residents of the Northwest Territories, not just the Department of Infrastructure. Thank you, Mr. Chair.
Thank you, Minister Schumann. Mr. O'Reilly.
Thanks, Mr. Chair. I was going to let it go, too, but now I am not. This corporation was set up in 2005. If this had been identified as a problem a while ago, it should have been fixed a long time ago. The only reason this is before us today is because of Cabinet's fiscal strategy of cutting programs and services to fund infrastructure, and that is a strategy that I have opposed from the beginning, and that is why this is before us here though, is to try to help BDIC out of this hole that has been created by Cabinet's fiscal strategy. Thanks, Mr. Chair.
Thank you, Mr. O'Reilly. Minister Schumann.
Thank you, Mr. Chair. This is not just about a fiscal reduction. We have got to do a review every five years, and we are going to do that. I am the Minister of ITI; they are under my realm, and I want to have a serious look at how this place is operating and what overlaps with other lending institutes we have in the Northwest Territories, and are we best facilitating and organization that meets the needs of the residents of the Northwest Territories and using our cash wisely. That is what you call prudent management, and we will continue to do that going forward. Thank you, Mr. Chair.
Thank you, Minister Schumann. Mr. O'Reilly.
I will cut it off there.
[Microphone turned off] Seeing none. Can we proceed to a clause-by-clause review of the bill?
Agreed.
Agreed. Committee, we will defer Bill 21, An Act to Amend the Northwest Territories Business Development and Investment Corporation Act, until after consideration of the clauses. Please turn to page 1 of the bill. I will read out, starting at Clause number 1. Does committee agree?
Agreed.
Clause 2?
Agreed.
Clause 3?
Agreed.
Clause 4?
Agreed.
Clause 5?
Agreed.
Clause 6?
