I will now call Committee of the Whole to order. What is the wish of committee? Mr. Testart.
Thank you, Mr. Chair. Committee would like to take into consideration Tabled Document 215-18(3), Capital Estimates, 2019-2020, and to consider opening remarks for the capital estimates in the Department of Environment and Natural Resources, the Department of Lands, and the Department of Municipal and Community Affairs. Thank you, Mr. Chair.
Thank you, Mr. Testart. Does committee agree?
Agreed.
Thank you, committee. We will consider the document after a brief recess.
---SHORT RECESS
I will now call Committee of the Whole back to order. Committee, we have agreed to consider Tabled Document 215-18(3), Capital Estimates, 2019-2020.
We are going to do things a little differently than we have done in the past. Just so that everyone knows what is going on, we will have opening comments from the Minister of Finance, and then we will have general comments from committee, at which time the Minister of Finance will take the witness table with some witnesses. As we move into the departments, the Ministers will switch out, if necessary, and new witnesses will come in. Traditionally, we have just had the Minister of Finance at the witness table for the entire capital estimates. I just want to get everyone up to speed.
First, I will turn to the Minister of Finance for opening remarks. Minister McLeod.
Thank you, Mr. Chair. Mr. Chair, I am here to present the Government of the Northwest Territories’ Capital Estimates, 2019-2020.
The Capital Estimates, 2019-2020 totals $325 million, of which $94 million is being funded by the federal government. The Capital Estimates includes $199 million for Tangible Capital Assets, $74 million for Infrastructure Contributions, $50 million for Public Private Partnerships, and $2 million for Deferred Maintenance.
Consistent with prior years, the Capital Estimates, 2019-2020 do not include appropriations for housing infrastructure proposed by the NWT Housing Corporation in 2019-2020. The appropriation for these investments will be sought during the Legislative Assembly’s review of the 2019-2020 Main Estimates. The NWT Housing Corporation’s 2019-2020 Capital Plan, totalling $18 million, is included in the Capital Estimates as an information item for review and comment.
Major highlights of the Capital Estimates include:
$118 million for highways, winter roads, bridges, and culverts across the NWT. This includes funding of $49 million for the Tlicho All-Season Road project, $22 million under the National Trades Corridors Fund, and $34 million for Building Canada Plan projects;
$42 million towards energy projects under the Investing in Canada Plan, which includes $18 million for the Inuvik Wind Project;
$62 million for health facility replacements, renovations, and equipment, which includes funding of $25 million for long-term care facilities in Hay River and Inuvik;
$29 million to continue to provide funding to community government for their infrastructure needs;
$17 million for new education facilities and renovations to existing facilities, which includes $12 million for the major retrofit of the Mangilaluk School in Tuktoyaktuk and $3 million for the replacement of J.H. Sissons in Yellowknife;
$9 million for deferred maintenance and energy upgrades to existing GNWT assets; and
$8 million for new and enhanced information technology functionality and upgrades.
That concludes my opening remarks, Mr. Chair. I would be pleased to answer any questions Members may have. Thank you, Mr. Chair.
Thank you, Minister. Would the Sergeant-at-Arms please escort the Minister's witnesses into the Chamber? Minister, you may take your seat at the witness table.
Minister, would you please introduce your witness to the House?
Yes. Thank you, Mr. Chair. Mr. Chair, I have with me Mr. Sandy Kalgutkar, who is the deputy secretary to the FMB. Thank you, Mr. Chair.
Thank you, Minister. I will open the floor to general comments from committee to the capital estimates as a whole. If there are detailed questions, please hold them until we get to the detail contained within the document.
Any general comments from committee on the capital estimates? Ms. Green.
Thank you, Mr. Chair. Mr. Chair, I note that this is the biggest ever, apparently, Infrastructure budget, the bulk of which is going towards roads and the bulk of which is being driven by the federal government's shared-cost projects that are going on at the moment.
I recognize that these projects are an important generator of labour income in communities throughout the NWT, but it is not clear at all how much of that labour is NWT labour, especially given the scope and size of these projects. I wonder, as well, given that, whether it would make more sense to spread the money out. It seems as if this is a similar situation that we got into with the mines, where they were all developed at once, and so the NWT labour pool wasn't large enough to supply labour to all three. I wonder if the same thing will happen with these large infrastructure projects. We do know that there have been considerable carry-overs year-to-year because of the amount of spending to be done and the relative lack of contractors.
What I see, as well, in this budget, is that much-needed investment in new schools is being pushed off into the 19th Assembly. There are key school projects that need to be completed, where schools are inadequate for the size of the student population, or they are inadequate because they have become in need of a major retrofit. What I see is that that investment has mostly been pushed off to the 19th Assembly.
I also note that there are no new investments in building new housing, although we know that more housing is needed, especially for seniors. There are huge waiting lists for rent-geared-to-income housing, affordable housing, here in Yellowknife, and we know that Mary Murphy seniors' home is aging and will need to be replaced. We also know that the Rockhill Apartments have burned down, and there is hope for a replacement of that building, and also, of course, a replacement for the Hay River Family Support Centre. It is important to note that that is not the only Family Support Centre that is in dire need of replacement. Of course, that particular building has been torn down, but it is my understanding that the family violence shelter in Tuktoyaktuk is not in very good shape either.
There are, of course, more projects in the queue, and roads seem to be taking a disproportionate amount of space here.
The other thing I wanted to mention of projects in the queue is an investment in tourism is required above and beyond what is mentioned in these capital estimates, specifically in a visitor information centre for Yellowknife, another in Tuktoyaktuk, and for park expansions in both places, where the parks in the Yellowknife area have become very full, and in Tuktoyaktuk, there are very limited tourism facilities, and more are needed now that that road is open.
I realize this is a capital budget, but I really do think that we need more money for the operating budgets, and we don't have to look any further than today's debate about resourcing the Child and Family Services area of Health and Social Services. Clearly, it is under-resourced. It has been under-resourced for many years, and there is more money required in that operating budget.
There are other budgets that we have discussed, operations and maintenance, departmental budgets, where we have identified a need for more spending to keep up with the demand for services, let alone introduce new ones.
With that said, I am looking forward to debating the details of the capital budget when we get into the particular departments. Thank you.
Thank you, Ms. Green. Next, I have Mr. Vanthuyne.
Thank you, Mr. Chairman. I am pleased to see that we have the capital budget before us. I do appreciate that this is a significant capital investment for us, a little bit more than what we normally see on a year-to-year basis in capital.
I appreciate that the federal government, this year, is aligning themselves to make significant dollar-matching contributions. A good portion of this year's capital budget, we are going to be able to expand on it significantly because a number of our dollars are going to be matched by federal dollars to the tune of 75 cents for every 25 cents of ours. That is a welcomed partnership and relationship with the federal government that is going to lead to critical pieces of infrastructure that will continue to build strong and, of course, sustainable territory and necessary infrastructure that we need in many aspects.
Something I wanted to allude to was that, while investments in highways and roads are significant, and that is just the nature of those types of projects, we are also making significant headway in a number of other areas. I think it is worth noting that $42 million towards energy projects is a very significant investment.
We continue to make very good investments in upgrading and replacement of health facilities. We have been doing that for a number of years, but we are also continuing on our Deferred Maintenance Program, and that also includes a number of energy upgrades to GNWT-owned assets, to the tune of about another $9 million. Given the size of our jurisdiction and our population, I am rather impressed with the investment that we are making in capital dollars towards energy upgrades and energy initiatives for our size of territory.
That said, though, I do have an underlying concern. Capital dollars are dollars that are often spent outside of the city of Yellowknife, and are expended in a number of the remote and smaller communities and allow for significant increase in employment opportunities in those regions. As we have heard before or just heard earlier from my honourable colleague from Yellowknife Centre is that carry-overs remain a concern. I am hoping that the Department of Finance can find some solutions to the challenges of which I know there is no easy solution, and that there are a number of facets involved as to why projects can be difficult to deliver upon, but that there needs to be some considerable effort put towards reducing our annual carry-overs.
In our last couple of capital budgets, we have seen instances where almost 50 percent of that year's budget has been carried forward, and now with the capital budget that is one of the largest that we have seen in a number of years. This remains a concern. I am hoping that we can hear from the department on some of the aspects that they are hoping to undertake in order to overcome that challenge.
That is it for now. I don't really have any specifics until we get into department-by-department. Thank you, Mr. Chair.
Thank you, Mr. Vanthuyne. Next on my list I have Mr. Testart.
Thank you, Mr. Chair. I am pleased to see a large infrastructure investment being brought before the House. I think infrastructure is the easiest way to create growth and jobs in the short term, and, if the projects are targeted in a good way, they can be a strategic investment in the future of all our communities and the future of our economy.
My only real concerns is actually the large size of this budget, and my colleague the honourable Member from Yellowknife North spoke well to this point. If you look at the percentage of infrastructure carry-overs from 2002-2013, the average was 32 percent of all funds carried over into the next year. If we apply that percentage to this proposed budget, that is $103 million. From 2017-2018 to 2018-2019, the carry-over percentage was 46 percent, $130 million of $270 million in the total appropriation. My concerns are primarily around that. I would love to see all this appropriation get spent and directly invested, but it does seem like the government struggles at times to move all of the infrastructure investment out the door. I know the Minister has given this some thought, and has some ideas on how we can improve this. If we are looking at nearly 50 percent of this appropriation not being spent in the year it is supposed to be, I think we have to really ask ourselves: are we doing the best job we can in investing in the economy and investing in critical infrastructure? It is a big territory, and I know many of my colleagues have issues with the large percentage of capital spending on highways, roads, bridges, and culverts, but, given the size and the geographical remoteness, I think those investments are just a necessity of life in the NWT now.
I think we have to do the best job we can in this last term to make the biggest impact on the economy, and I think this budget is headed in the right direction, but I would appreciate if the Minister could alleviate some of my concerns around these large percentages of carry-overs that we see year and year again. Thank you, Mr. Chair.
Thank you, Mr. Testart. Do you have further comments, Mr. Testart?
No, sorry.
Thank you, Mr. Testart. What we will do is we will do a round of general comments, and I will give the Minister a chance to respond. Next, I have Mr. O'Reilly.
Thanks, Mr. Chair. I do have some general questions for the Minister, so I would like to start with whether there have been any calculations done to ensure that the capital budget fully complies with the fiscal responsibility policy. Thanks, Mr. Chair.
Thank you. Minister.
Yes, it does. Sorry, I was cut off guard there. You said we were going to do a round and then have the Minister respond to all concerns at once, but yes.
Thank you. Mr. O'Reilly threw a wrench in our plan here, and he had specific questions. He has nine minutes of specific questions for you. Mr. O'Reilly.
Thanks, Mr. Chair. I'm not sure I have nine minutes of questions, but I like the idea of wrenches. If the Minister has done those calculations, is that something that can be shared with the public? Thanks, Mr. Chair.
Thank you. Minister.
I don't see why not, Mr. Chair. Thank you.
Thank you. Mr. O'Reilly.
Thanks, Mr. Chair. Yes, I look forward to the Minister then finding a way to make that information public, whether he tables it in the House or posts it on the Department of Finance website. Those are my two suggestions.
I've heard some concerns from Regular MLAs, and I too have concerns about the amount of carry-overs. Can the Minister tell us: is there a percentage of the capital budget that really represents carry-overs or a dollar amount that would allow us to understand what the carry-overs are from previous years? Can the Minister provide that information? Thanks, Mr. Chair.
Thank you, Mr. O'Reilly. Minister McLeod.
Thank you, Mr. Chair. Mr. Chair, in all fairness to some of the previous speakers that had some concerns with carry-overs, I think I may as well address that issue right now. The Members are correct. There is a significant amount of carry-overs. Last year, I believe it was a little over $100 million in carry-overs. It could be for different reasons. Projects could be in the planning stages; the money is appropriated for a particular project. It could be in the planning stages. Contracts could not be let; contracts could just be assigned. That could be some of the reasons for the carry-overs.
I have had discussions with my Cabinet and FMB colleagues, and I have asked them about the amount of carry-overs and that there was a concern with the amount of carry-overs, and, if the projects were sitting in the hopper for too long, then maybe it's time that we reallocated that money if there hasn't been any significant movement on some of the projects. I will be monitoring that quite closely to be sure that we don't have too many projects sitting in the hopper for a couple, two or three years, and if there is an opportunity to use that money elsewhere, to the Member's second point.
I hope that addresses some of the Members' concerns with the amount of carry-overs we have. There are different reasons for carry-overs. Maybe this is an item that I need to sit down with committee and give them a good briefing on it with some of the numbers that are involved. As for the Member's other question, I'm going to ask Mr. Kalgutkar to reply to it, Mr. Chair.
Thank you. Mr. Kalgutkar.
Thank you, Mr. Chair. In terms of the funding that is being requested for the 2019-2020 budget, there are no provisions for carry-overs in the 2019-2020 Capital Estimates. These are the funding that we are anticipating to spend in 2019-2020. The carry-over amounts usually come forward via the supplementary process for carry-overs in the 2019-2020 Capital Estimates. This is the funding that we are anticipating to spend in 2019-2020. The carry-over amounts usually come forward via the supplemental process, so you'll likely see the carry-outs for the 2019-2020 fiscal year in the first supplemental in the 2019-2020 fiscal year. Thank you, Mr. Chair.
Thank you. Mr. O'Reilly.
Thank you, Mr. Chair. Well, if I wasn't confused before, in any event, the Minister indicated that probably in the neighbourhood of $100 million on a capital budget of maybe $230 million of our own money. I don't have a calculator. That's 40 percent. It's carry-overs from previous years. That's a very significant amount of money that's being carried over. I appreciate that the Minister has said that he's going to monitor this more carefully. I hope that he can find a way to report that, as well, to us as Regular MLAs.
In the tracking that's done, it's going to be very important to understand the cause of the delays. Is the cause of the delays within the departments that are supposed to be spending the money, or is the cause of the delays within a department like Infrastructure that takes care of procurement? Because they may not have enough resources to get the contracts or tenders out the door, so then the department that was going to spend the money gets penalized. That's what I'm concerned about, so can the Minister tell us what kind of tracking system he's going to put in place and how he's going to prevent departments that want to get projects done from being penalized if there are capacity issues within a department like Infrastructure that takes care of procurement? Thank you, Mr. Chair.
Thank you, Mr. O'Reilly. Can the Minister clarify whether the carry-over amount is included in this capital budget? I believe he said it was going to be included in the supplemental, so this $324 million is all new money? It doesn't include any carry-overs? Can you first confirm that? Thank you.
You're absolutely correct, Mr. Chair.
Thank you. Now, can you answer Mr. O'Reilly's question? Mr. O'Reilly asked what the issues were in getting the money out. Minister.
Yes. Thank you, Mr. Chair. Mr. Chair, I did state before one of the first things that I did to try to monitor this is to put the departments on notice, my colleagues on notice, that I will be monitoring this. I'm sure, as we gather the information, we'll have a fairly good indication of why some of the projects are late. Maybe the specifications haven't been done. It could be a number of different reasons. I can't sit here and start to speculate on what some of those reasons are.
I have made a commitment that we would monitor this a lot closer to make sure that the money that's been allocated goes out the door. If there's a bottleneck somewhere or there's an issue with the department, itself, or whoever is administering the contracts on their behalf, then I think we'll have an opportunity through the monitoring to identify that and take steps to address it. If it's resources capacity, then we'll have to deal with it at that particular time. Thank you, Mr. Chair.
Thank you. Mr. O'Reilly.
Thank you, Mr. Chair. Now that the clock has almost run out, I do have some bigger-picture concerns with the capital budget that I think have been articulated by some of my colleagues, as well. There's an overwhelming focus on roads again, and I understand that some of this is related to federal funding, but I notice, and I've said in the House, that our sister territory Nunavut has found ways to support public housing to a greater extent than we have through federal infrastructure funding. I'm concerned about the local government funding gap, the municipal funding gap, that we had identified over a number of years and how much progress we're going to be making on that, and I'll raise that at the appropriate time.
I've heard about the lack of tourism investment in Yellowknife and in Tuktoyaktuk. I think that's all I can squeeze in, Mr. Chair, for now, but I appreciate the commitment that the Minister has made on tracking and reporting on carry-overs, and I hope that he can find a way to share that on a regular basis with us on this side of the House. In future, capital estimates, if he can find a way to document compliance with the fiscal responsibility policy, as well, that would be helpful. Thank you, Mr. Chair.
Thank you, Mr. O'Reilly. Next, I have Mr. McNeely.
Thank you, Mr. Chair. I too support this capital budget, and think about the remote area connections with the capital investments, keeping in mind the receiver of the capital budget allowances for these various initiatives would be the creation of income for various families that are looking forward to some of these projects coming on stream, and also being mindful that this government has exhausted and created a partnership with the federal counterparts. So it's good to see that. I'm also mindful that it's hard to be a solution-provider to anything and everything when you consider the large area we have and the logistical challenges of supporting projects. So, certainly, there's going to be a carry-over. Most areas are seasonally accessible, so, given that principle, it creates carry-over. So, in short, I like the energy that went into this large capital initiative, and I look forward to going into the detail. Thank you.
Thank you, Mr. McNeely. Mr. Thompson.
Thank you, Mr. Chair. I'm trying to be as short as possible because the Minister has heard a number of our colleagues talk here. So my big concern is the municipal funding shortfall. We're talking about $20-million-plus, and that seems to be a huge issue that we still haven't dealt with. If we're having this carry-over year after year after year, maybe that's something that we need to be looking at as putting funding into the municipal governments to help them deal with their capital needs and issues as we move forward. So that should be addressed.
I do have to give the government credit. This is the biggest capital investment that seems to have hit the Assemblies here, so I do have to thank the government for looking at that, but, again, there are some shortfalls in some areas, and I'll have questions for the particular departments as we move forward. Thank you, Mr. Chair.
Thank you, Mr. Thompson. There's no one further on the list, so I will give the Minister up to ten minutes to respond to the general comments. Minister McLeod.
Thank you, Mr. Chair. I thank the committee for some of their comments, and we hear their concerns. Members are absolutely correct. This is probably the biggest capital budget this territory has ever seen, and, with some of the carry-over, I think that increases it even more. This is much-needed investment in a territory where things are very slow now, and we see the importance of a lot of the capital investment across the Northwest Territories.
There were some concerns with the money that was going into roads, but you have to be without a road to understand the importance of having a road. I think we have to look no further than the ITH and the benefit it has brought to the people up there.
If you can leverage $0.75 on the dollar and use $0.25 of your own dollar to move your projects ahead, I think that is a wise use of money. That allows us as a government to reinvest some of the money that we may have invested into these particular initiatives somewhere else. I was just asking Mr. Kalgutkar what our normal capital budget was, and I think it is in around $200 million, maybe just under $200 million. With the significant amount of the investment we have had in the federal government, we would be able to increase that to $325 or $340 million. It is a welcome investment. We hear the concerns of the Members.
The carry-overs, I spoke a bit to the carry-overs before. Building new housing, I am sure the Minister of Housing has heard your concerns. You will have more discussion when you get into the housing information item. There is some challenge with the housing.
I think the Member for Nahendeh raised the investment in the community money. The $29 million we are investing into this particular capital budget is an increase from the $27 million in capital infrastructure money that has been part of the community budget, I think, almost since the new deal in 2007. That number has finally gone up this year. It is $29 million.
The funding shortfall that Members speak of is more on the operations side. There is an opportunity for the communities. My understanding is that they are able to use five or up to 10 percent of the infrastructure money to help deal with some of the operation challenges because communities are much appreciative of the investment in infrastructure.
One of the things in my time as Minister of MACA that I heard from the NWT Association of Communities is: they have all this capital money. They are putting it toward a lot of their capital projects. On the operations side is where they were concerned with so many capital projects coming on stream. They didn’t feel they had sufficient operation. There was a lot of work done a few years ago to try and address that. I think in the last couple of operations budgets, we’ve made investments into trying to address the funding gap. It is still a large gap. There was a lot of good work that was done, I think, at the end of the 16th Legislative Assembly.
On the Child and Family Services, you heard the Minister say before, in responding to questions, that they were looking at bringing forward their work, doing some work right now. They are looking forward to bringing a proposal to the FMB to see if there is more money that could be had for some of the programs that they offer.
Energy projects, I appreciate the comments from the Member from Yellowknife North. There is a lot of money being invested into energy projects, and that is the way of the future. One of the things in my time here, in the Assembly, and having travelled all across the Northwest Territories, visited every community, my time as Minister of Housing, I had an opportunity to visit a lot of the local housing authorities, and I was always quite impressed with the proactive steps they were taking and already starting to invest into a lot of energy projects.
We were dealing with climate change and the high cost of living before it was big news. We were dealing with it. Now that it is out there, we have been able to leverage a lot of investment into many of the projects that we want to see go forward. I know our folks have been doing a lot of work out on the front lines, trying to address it and dealing with climate change and houses getting awfully close to the bank. The federal investment is quite welcome.
I think it was the Member from Yellowknife Centre who talked about such a large infrastructure budget and the fact that we may not have the capacity or the labour force to do it. In some of the work that we have done, we are thinking that this has the potential to create up to 1,200 jobs, I think is the figure I have seen somewhere. Of course, there is going to be concern with such large infrastructure projects. Some may be awarded to firms from the south. We don’t know that. Some may have to bring in some people from the south. Hopefully, like a lot of people, they fall in love with the North and just decide to stay here.
If you notice, a lot of this money is in the regions and in some of the smaller communities where we would like them to take advantage of the local labour force that they have in the communities, which would be a benefit. Again, I use the Inuvik Tuktoyaktuk Highway for an example because that created close to 600 jobs. Eighty-five percent of those jobs were people from the Beau-Del and other parts of the Northwest Territories.
I have seen the fact that income support payments had gone down and housing rent collections had gone up. That, I think, was just a benefit of having that project go ahead. Now, you see. I talked to folks from Tuktoyaktuk a lot up in Inuvik. They drive in and they are very pleased with the road and the benefits that it has brought to them. As I said before, you have to go without a road to appreciate the value that a road brings to your area. If we can use federal money to help leverage $0.75, if I can use $0.75 of your money and put in $0.25 of my own to buy something, why not? It is just good business, and it is beneficial.
There were a number of other areas that were touched on. I hope I responded to most of the major issues that were raised or all the issues that were raised. Again, we do have a very significant capital budget. I believe at this time, it is a much needed investment with the economy slowing down in some parts of the Northwest Territories and where the work that is come from the government through the capital budget would be fairly welcome. I think I have addressed a lot of the concerns.
As we go into each department’s capital budget, I am sure Members will have more detailed questions that the Minister of that particular department will be in a better position to answer. Thank you, Mr. Chair.
Thank you, Minister McLeod. Committee, we have agreed to, first, consider the Department of Environment and Natural Resources. I will thank the witness for joining us. Sergeant-at-Arms, you may escort the witness from the Chamber. Sergeant-at-Arms, you may escort the witnesses back into the Chamber. Committee, we have before us Minister McLeod but this time in his role as the Minister of Environment and Natural Resources. Minister would you please introduce your witnesses to the House?
Thank you, Mr. Chair. Mr. Chair, to my right, I have Dr. Joe Dragon, deputy minister of Environment and Natural Resources. To my left, I have the well-dressed Dennis Marchiori, director of Corporate Services. Thank you, Mr. Chair.
Thank you, Minister. Committee, Department of Environment and Natural Resources begins on page 16 of the Capital Estimates. As always, we will defer departmental total until after consideration of the activity summaries, the first of which can be found on page 18, Environmental Protection and Waste Management. If committee has comments or questions about this item or the associated information item on the next page, now is the time to get those out. Seeing none, I will call this item. Environment and Natural Resources, Environmental Protection and Waste Management, infrastructure investments, $140,000. Does committee agree?
Agreed.
Thank you, committee. Please turn to page 20, Forest Management. There is an associated information item on page 21. Comments or questions? Seeing none, I will call this item. Environment and Natural Resources, forest management, infrastructure investments, $1,149,000. Does committee agree?
