Debates of March 6, 2019 (day 65)

Thank you. Mr. Kalgutkar.

Speaker: MR. KALGUTKAR

Thank you, Mr. Chair. At the end of the contract, the fibre line does become a GNWT asset, and, at that time, it would mean an opportunity to either renew the contract with Northern Lights Fibre Consortium or just look for another service provider to maintain and operate the line for us. As the Member says, it is fairly specialized. You need fairly specialized expertise to manage the fibre, so it would likely be in the best interests of the government to look at somebody, whether it's Northern Lights or somebody else, to manage the fibre for us. Thank you, Mr. Chair.

Thank you. Mr. Vanthuyne, your time has expired. Anyone further? Seeing none, I will call this activity. Finance, management board secretariat, operations expenditure summary, $76,734,000. Does committee agree?

Speaker: SOME HON. MEMBERS

Agreed.

Thank you, committee. Please turn to the fifth activity, Office of the Comptroller General. Comments or questions? Seeing none, I will call the activity. Finance, Office of the Comptroller General, operations expenditure summary, $64,933,000. Does committee agree?

Speaker: SOME HON. MEMBERS

Agreed.

Thank you, committee. Committee, we have an information item at the end of this department. Comments or questions? Seeing none, we will return to the departmental total, which is found on page 135. As I stated earlier, we will leave the borrowing plan until after we are done with the department, and then we will move to the borrowing plan. If we have comments or questions on the totals, the organizational charts, or the revenue summary, now is the time to ask them. Mr. Vanthuyne.

Thank you, Mr. Chair. The Minister knows that, on occasion, I have questioned what the future of the territorial financing formula might look like and what opportunities there might be to negotiate or renegotiate that with the federal government. That aside, I think what we all know typically is that the agreement is that own-source revenues, the more that we generate, there is some clawback on the territorial financing formula. However, interestingly enough here, I see that the grant from Canada has grown a little bit compared to last year and more so from the year prior, but then our own-source revenues have also grown. I am wondering: was there no clawback, or how did we manage to generate more of our own-source revenue without having a reduction in the federal grant from Canada? Thank you, Mr. Chair.

Thank you. Mr. Stewart.

Thanks, Mr. Chair. The way the formula works in terms of the grant from Canada is it does look, as you note, around our own-source revenue and those sorts of things, but, to take out the fluctuation, it uses a moving average of a couple of years of critical data in terms of the escalators that are built into the formula. So sometimes you will see it both going up, and sometimes you will see it going the other way, but it is to smooth it out, and that is part of the reason why you would see the scenario that you are talking about. In terms of the grant itself, it is a three-year moving average, and it uses, actually, lag data, so it's from data from two years previously so that you have lots of time to plan for what you know what your formula is going to be. That is part of the reason that you see the pattern that the Member described. Thanks, Mr. Chair.

Thank you. Seeing nothing further, I will call the departmental total. Finance, total department, $258,202,000. Does committee agree?

Speaker: SOME HON. MEMBERS

Agreed.

Thank you, committee. Does committee agree that this concludes our consideration of the Department of Finance?

Speaker: SOME HON. MEMBERS

Agreed.

Thank you, committee. I will ask the Minister and the witnesses to stay put, as we are now moving to the borrowing plan. It is the second blue tab in the document. Right after the summary tab, we see a blue tab that says "borrowing plan." As is our tradition and the requirement, we will go through this and vote on this item. First, I have Mr. Vanthuyne for comments or questions.

Thank you, Mr. Chair. Just a couple of things that I have. I always find it interesting when I see the word "contingency" when it comes to government spending. It seems like, in our borrowing here, we've identified in certain line items "contingency." I appreciate the asterisk here that says, "Contingency amounts are based on the estimated working capital requirements during the year, which can vary significantly." What I'm trying to understand is, how does borrowing even have a contingency to begin with? This could be totally an ignorant question, but I'm trying to understand this. I'm a project manager by background, and I've always recognized, in my previous years in working with the government, that government, or I should say taxpayers at large, don’t really approve of contingencies. So I'm trying to understand, what does "contingency" as it relates to Government of the Northwest Territories borrowing? Thank you, Mr. Chair.

Thank you. There's no such thing as a stupid question, Mr. Vanthuyne. Mr. Stewart.

Thanks, Mr. Chair. I'll deal with the first line here on short-term debts. Our short-term debt is essentially our cash shortfall, if you like. The main estimates project that, if the short-term debt is going to go from $318 million up to $325 million during the year, with short-term debt, you can imagine a scenario where, for example, if we had a very bad fire season and our supplementary appropriations were much greater than we expected to be. So what this is doing is saying, let's put in a contingency amount so what this Appropriation Act is saying is that, if you need to borrow on short-term debt up to $390 million, the Legislative Assembly is giving you that authority through this appropriation.

You can't know on all of these. You're forecasting which is what's in the main estimates of our best guess for March 31, 2020, and then, we're giving ourselves some room, particularly on something like short-term borrowing for things like emergencies related to fires and those sorts of things that would be unexpected. It's really just to give room so that, if there is an emergency, you can do that spending without having to come back and seek an appropriation on that type of a basis. That's probably the cleanest explanation. Thanks, Mr. Chair.

Thank you. Mr. Vanthuyne.

All right. Thank you for that explanation. Do we just pick an arbitrary number, or is this a typical percentage of the larger amount? Thank you, Mr. Chair.

Thank you. Mr. Stewart.

Thanks, Mr. Chair. I mean, largely, it is a best estimate that we can come up with, knowing past events that have happened and those sorts of things. It's not based on a formula, or anything like that. It's just to give us that room that might be needed. I think anything beyond that, you'd want to be coming back for those borrowing authorizations. Thanks, Mr. Chair.

Thank you. Mr. Vanthuyne.

I appreciate that. If we look at the NWT Hydro Corporation, in their short term, they look like they're going to be borrowing a significant amount over this next year. I have two questions. One is: can we just get a reminder as to why we're going to see that significant increase? Then: why is it that no other corporation seems to have a contingency, or is that just not a necessary thing? Thank you, Mr. Chair.

Thank you. Mr. Stewart.

Thanks, Mr. Chair. In terms of the Hydro Corporation and their short-term debt, there were some estimates built-in, and they were quite generous in terms of things that they might have to borrow for. There are some resource-related projects that they've responded to RFPs to provide power there, that they would have to borrow to have the generation available for that. They have some other things out there that they may have to borrow some money on. That was all built-in. Not all of those may necessarily happen, but we wanted to make sure they had the room to be able to do that.

In terms of the contingency, we don't see the Hydro Corporation or the Housing Corporation having the same type of that emergency situation, like a forest fire, that would be needed to have that contingency built in. They have other mechanisms that are there in terms of being able to deal with those things, so we don’t include contingencies on those. Thanks, Mr. Chair.

Thank you. Mr. Vanthuyne.

All right, thank you. Just my last question. To see such a significant increase in one year in this type of borrowing, can I get some slightly better description of what the intention is for that? I recall, at some point in time, the previous president of the Power Corporation indicating that, yes, there were going to be some necessary investments with regard to the NT Power Corporation. We're also aware, of course, of the whole scenario that is under way as it relates to Power Corporation potentially being a power distributor for the Town of Hay River. I'm trying to understand, are there some asset acquisitions that are being made? I mean, we're talking about a $100-million increase here, so I'm just trying to get some justification, some substantiation, on why the big increase. Thank you, Mr. Chair.

Thank you. Mr. Stewart.

Thank you, Mr. Chair. Maybe we can provide some additional detail on that, as well, but I will say that I think the Member hit on a couple of big areas. One, the Hay River franchise. They're still going through that process, but there will have to be some borrowing to be done to be able to purchase the assets when the franchise turns over for Hay River. There are two other resource projects that I know they put in a request for proposal. There was a request for proposal to be the power provider for the NICO project, should it proceed. This gives them the capacity, if they were successful in that, to be able to provide power for that. I believe another project down in the southwest corner of the NWT also will be looking for a power provider, so it gives them that room, as well. I think those are the main components that are in there, but maybe we can get some additional detail and provide it to the Member. I don't have it in front of me, but that's the kind of thing that's in there. Thank you.

Thank you. Anything further? Mr. Vanthuyne.

That's appreciated. Then maybe what I'll do is I'll ask the Minister if he can commit to providing that additional detail so that we have it. Thank you, Mr. Chair.

Thank you. Minister.

Yes, thank you, Mr. Chair. We'll be glad to provide it to the Members. Thank you.

Thank you. Anything further? Mr. Vanthuyne.

No, I won't ask for a 12-person committee, or anything like that.

Thank you. Seeing nothing further, I will call this activity. Borrowing Plan for the Government Reporting Entity and Established Borrowing Limits for the Government of the Northwest Territories, established limits for 2019-2020 Appropriation Act, total government borrowing, $809,276,000. Does committee agree?

Speaker: SOME HON. MEMBERS

Agreed.

Thank you, committee. Does committee agree that we have concluded consideration of the Borrowing Plan for the Government Reporting Entity and Established Borrowing Limits for the Government of the Northwest Territories?

Speaker: SOME HON. MEMBERS

Agreed.

Thank you, committee. Thank you to the Minister and to the witnesses. Sergeant-at-Arms, please escort the witnesses from the Chamber. What is the wish of committee? Mr. Thompson.

Shane Thompson

Nahendeh

I'd ask the Chair to stand and report progress.

Would you like to move that, Mr. Thompson?

Shane Thompson

Nahendeh

I'd like to move that the Chair stand and report progress. Thank you, Mr. Chair.

Thank you, Mr. Thompson. There is a motion to report progress. The motion is in order and non-debatable. All those in favour? All those opposed? The motion is carried.

---Carried

I will rise and report progress.

Report of Committee of the Whole