Thank you, Mr. Chair. The easiest answer is no.
Thank you. Mr. Beaulieu.
At least, I guess, in communities that are considered not to have accumulated deficit, the money stays the same? I am going to take the answer "no" as meaning that.
My question is: when you accumulate a capital deficit, it is based on depreciation, I am assuming. I am going to ask the question, though: is the capital deficit accumulation based on the depreciation of the assets you have? Thank you.
Thank you. Mr. Tordiff.
Thank you, Mr. Chairman. The calculation for capital is based on the core needs of infrastructure in a community and the estimated life cycle for that infrastructure.
Thank you. I will just remind the witness to indicate when you are done talking with a "thank you," just so that the technical team knows to change the mics. Mr. Beaulieu.
[Microphone turned off]…turned capital, but I could also say infrastructure. Now, if there is a community, such as Yellowknife, which has lots of infrastructure, and there is a depreciation on that infrastructure, then, every year, when they replace water lines, I know that there is little depreciation the first year, but as soon as it goes into use after one year, there is a depreciation. That depreciation would be considered a deficit in the infrastructure. That is what I am trying to get at.
In the small communities, we have very little infrastructure, a few warehouses here; most of our roads are gravel; we have no running water. We have water trucks that haul things around and so on. They depreciate as well, but they are very minor items. If you write a water truck off over 10 years versus trying to write off a water system over 50 years, I mean, I realize that some of the systems in the city last longer, but, Mr. Chair, what I am trying to get at is that we, in some of the small communities, don't appear to have huge infrastructure deficits because we don't have the infrastructure that we need. Not all of our streets are chipsealed. We don't have piped water systems. We don't have the swimming pools, arenas. I mean, we do have some arenas, but not something, certainly, like what some of the larger centres have.
I have always been concerned about the way that infrastructure deficits are accumulated. It looks like the people that have the most have the greatest deficits. The greatest amount of money goes to the people that have the most infrastructure, and the communities that have very little infrastructure are having very little accumulation of appreciation, if I can use that term. It is kind of an oxymoron, but there is an accumulation of deficit to determine the infrastructure deficit.
I am wondering if the Minister has looked into that system that they have employed since 2014 to see if it really is a fair system in determining infrastructure deficits. Thank you, Mr. Chair.
Thank you. Minister Moses.
Thank you, Mr. Chair. As you heard before, we are developing an asset management program. When we do look at the deficits, we really do look at the core infrastructure. As I mentioned, a lot of this money goes to core needs for the communities, and we do base it on service life rather than market price at the time. I think this asset management program that the department has been developing is going to help identify some of the things that the Member has mentioned. Thank you.
Thank you. Mr. Beaulieu.
Thank you, Mr. Chairman. I am kind of understanding the core as, like, maybe this is the basic infrastructure that would maintain the city or maintain a town or a hamlet. Maybe I could just get the Minister to give me an example of what would not be considered core infrastructure. I don't see the difference between core infrastructure and infrastructure, period. I was wondering if maybe I could just get that explanation. Thank you, Mr. Chair.
Thank you. Minister.
Just for clarity, is that what the core needs are in the community, or what is outside of it or just the core needs? Sorry, I missed part of the question there.
Thank you. Some clarification, Mr. Beaulieu?
Like, when the Minister referred to core infrastructure, I was wondering what that included. For me, core infrastructure are all the roads, ditches, dumps and docks -- no, not docks, maybe trucks and heavy equipment. Just a clarification of what would be outside of core infrastructure?
Thank you, Mr. Beaulieu. Minister.
Thank you, Mr. Chair. Some of those would include roads, as he mentioned, water, sewage services, solid waste sites, some of the main things that you would see in almost any other community. Maybe I will ask Mr. Tordiff if there was anything that I might have missed. You mentioned some other ones earlier, such as other facilities such as garages for the community for storage and things like that, but maybe through you, Mr. Chair, I'll ask Mr. Tordiff if he has anything further he can add.
Thank you. Mr. Tordiff.
Thank you, Mr. Chair. The Minister has a pretty good summary of what we would consider core infrastructure. Communities of course have the discretion to invest in whichever capital they choose, if they choose to build a swimming pool or so forth. We fund the core infrastructure, and that structure is like roads, water treatment plants, water-delivery truck. That type of equipment is what we would consider core. Thank you.
Thank you. Mr. Beaulieu.
Thank you, Mr. Chair, I understand. Swimming pools and things like that, I recognize are outside of the core. I am beginning to understand what that is. When the department does infrastructure deficit, they are looking at the core and they are comparing apples to apples. That's what I want to hear. Thank you for the explanation to the Minister, and that is all I have for now, Mr. Chair.
Thank you, Mr. Beaulieu. Next, Mr. O'Reilly.
Thanks, Mr. Chair. I want to follow up on the municipal funding gap review that was done jointly between MACA and NWTAC some time ago. One of the commitments in our mandate reads, "We will develop a strategy to close the gap in funding levels to meet municipal core needs." Can the Minister tell us when that strategy is going to be ready and made available to the Regular MLAs and the public? Thanks, Mr. Chair.
Thank you. Minister.
Thank you, Mr. Chair. As I mentioned, we are looking at working on it again. We put a delay on it since there was an election coming up. I would say, probably the earliest that we might be able to see it, I would say, is in February.
Thank you. Mr. O'Reilly.
Thanks, Mr. Chair. I appreciate that. I look forward to getting the document in February. Can the Minister tell us whether the gap itself has been recalculated? Obviously, as we move forward in time, infrastructure changes, cost of living increases and so on. Does the department actually recalculate this on a regular basis? Thanks, Mr. Chair.
Thank you. Mr. Tordiff.
Thank you, Mr. Chair. We were able to have a good idea of the inventory in the communities through the asset inventory that communities maintain as well as other filings with their insurance program.
Thank you. Mr. O'Reilly.
Thanks, Mr. Chair. That's interesting. Is the gap, the funding gap, actually recalculated on an annual basis? Has it ever been recalculated? Is there a cycle for that? Can someone tell me whether it's actually recalculated? Thanks, Mr. Chair.
Thank you. Mr. Tordiff.
Thank you, Mr. Chair, I believe that that will be a component of the new strategy, the recalculation of the deficit. Thank you.
Thank you. Mr. O'Reilly.
Thanks, Mr. Chair. Okay, so we are going to have a recalculated figure. That figure, can someone tell me how it is actually calculated? I know there is some sort of an inventory that the department has prepared, a condition of buildings and infrastructure changes over time. Presumably, somebody's going to have to go out and look at some of that stuff again. Can I get just a bit of a general explanation of how that figure is arrived at? Thanks, Mr. Chair.
Thank you, Mr. O'Reilly. Minister.
Thank you, Mr. Chair. We don't have that level of detail right now, but we can get that information for the Members and committee for future references. Just for clarity, while I'm talking about the funding gap, we will be bringing out the strategy within February. It is focused on the O an M budget. I know that a lot of our communities, when they build the infrastructure, the O and M is sometimes one of the challenges, that they have to keep it maintained. For that specific question for the Member, we'll get that information, and we will get it back to the Member. Thank you.
Thank you, Minister. Mr. O'Reilly.
Thanks, Mr. Chair. Maybe I'm mistaken here, but I understood that the funding review was done, when it was done, part of it was an O and M issue or problem, part of it was also a capital deficit. Am I hearing, then, that the Minister says that the document we are going to get in February is really only going to deal with the O and M side; it's not going to deal with the capital, the infrastructure deficit? Thanks, Mr. Chair. For our local governments. Thanks, Mr. Chair.
Thank you. Minister Moses.
Thank you, Mr. Chair. The strategy that you will see before you is going to be also through the O and M. We will also be looking at that in the O and M budget. What we have right now is, all we're talking about is, capital. When we recognize the capital, it is on a quarterly basis. As I mentioned, one of the ways we are trying to adjust that is through some of our federal funding agreements to try to offset some of those core need infrastructure in some of the communities. Thank you.
Thank you. Mr. O'Reilly.
Thanks, Mr. Chair. Yes, okay. The document the Minister is going to give us is only going to deal with the O and M side. I will double check myself, but I understood that this gap also was on a capital side, and that's why I'm raising it here. I know some folks don't want us to talk about O and M, but I am talking about capital. As I understood, that municipal funding gap review also had a capital component. I look forward, if the Minister can clarify that when he provides the additional information, that will be much appreciated. Thanks, Mr. Chair.
Thank you. Minister.
Agreed.
Thank you, Minister. Next, I have Mr. McNeely.
Thank you, Mr. Speaker. I am going to just ask questions directly to the capital side. The O and M is coming up here, but I think I brought this up here last year, as well. On your supply management inventory requirements, if you use the water treatment plant there, in some of the communities, I'm hoping that, if it is being supplied by this company called Cortex (ph), so, if it is in fact in the contribution agreement between the department and the local government encouraging them to deal strictly with similar suppliers and making it a lot easier to interact and supply and support each other on, say, filters, for example, for the water plant.
If Deline runs out, well, then they can borrow from other neighbouring communities. Those kind of factors come into play when you have one supply chain management for the same product. Economies of scale come into factor, as well, just being more mindful of efficiency on the expenditures side of the capital that is being built in these communities. That is more of a comment that I brought out last year, and I will bring that out again.
My next comment: I agree with the Member from Yellowknife North on having arguments for our depreciated infrastructure in preparation for the next round of TFF negotiations to see if there are substantial arguments to get our gap filled with increased contributions coming from our bank or the federal government. Thank you.
Thank you, Mr. McNeely. Minister.
Thank you, Mr. Chair. To the Member’s first comment there, when it comes to, I guess, like, some of the, I guess it would be, O and M materials, we do go by standard design. We work with the NWTAC. When we look at purchasing, we do group purchases so that it is available should something happen. I take the Member’s comments that, when we are looking at negotiating with federal government, that we do take everything into consideration. Thank you, Mr. Chair.
Thank you. Next, I have Mr. Thompson.
