Thank you, Mr. Speaker. Your Standing Committee on Economic Development and Environment is pleased to provide its Report on Bill 36, An Act to Amend the Petroleum Resources Act, and Bill 37, an Act to Amend the Oil and Gas Operations Act.
Mr. Speaker, Bill 36, An Act to Amend the Petroleum Resources Act, and Bill 37, An Act to Amend the Oil and Gas Operations Act, provide the framework for the administration and management of the exploration and production of onshore petroleum resources in the Northwest Territories. The Petroleum Act governs how the Government of the Northwest Territories will act as the owner and manager of petroleum resources and sets the rules for companies to acquire the rights to explore for and produce oil and gas in public lands in the Northwest Territories. The Oil and Gas Operations Act regulates oil and gas activities and promotes safety, the protection of the environment, and the efficient extraction of oil and gas resources.
The amendment of oil and gas legislation is part of the mandate of the Government of the Northwest Territories 2016-2019. Under mandate point 1.3.2, the Department of Industry, Tourism and Investment committed to develop and propose amendments to both acts. The department expressed that the proposed bills are a first step towards a larger review aimed at modernizing legislation and improving transparency of petroleum production in the Northwest Territories.
The Standing Committee on Economic Development and Environment, "the committee," commends the Minister for the development of these bills. Bill 36 and Bill 37 make amendments to existing legislation and propose to increase transparency and public accountability in the Petroleum Resources Act and the Oil and Gas Operations Act.
Both bills received second reading and were referred to the committee on February 22, 2019. Public hearings were conducted during May and June 2019, and the clause-by-clause review was held on August 2, 2019. During the review, the committee passed seven amendments to address concerns identified by the stakeholders and committee.
Overall, stakeholders indicated support of the bills. Many stakeholders were concerned for each bill to achieve the most appropriate balance between information to be made public and confidentiality to be provided. Stakeholders also raised concerns about the term for Significant Discovery Licences (SDL) and suggested additions to the proposed reporting requirements on hydraulic fracturing fluid recovered from a well.
The work of the standing committee to amend Bill 36 and Bill 37 is set out in this report. The remainder of this report addresses concerns from stakeholders and committee, provides rationale for the motions brought forward by committee and recommends several courses of action. Motions are listed in order of their appearance in the bills in the chapter of clause-by-clause review of the bills, and are referred to in this report by the number assigned.
Bill 36 and Bill 37 are among the legislation for which federal consent in certain instances is required. For the purposes of the Oil and Gas Operations Act, the National Energy Board continues to be the regulator for onshore development in the Inuvialuit settlement region. The Office of the Regulator of Oil and Gas Operations generally performs this function in the onshore in other parts of the Northwest Territories.
According to section 22(2) of the Northwest Territories Act, the Northwest Territories Legislature is required to seek federal consent for amendments that would change the regulatory functions of the National Energy Board, if these functions apply to the onshore portion of the Inuvialuit settlement region. This requirement is in effect for 20 years from the day on which the act came into force in 2014.
Committee learned in a later stage of the legislative review process that federal consent had already been sought by the department and been granted for several amendments proposed in Bills 36 and 37. Committee would have preferred that committee's efforts to improve the bill through making amendments based on public consultation had been considered and committee's oversight and accountability role been taken into account. Committee therefore makes the following recommendation.
The Standing Committee on Economic Development and Environment recommends that, should any portion of a bill require federal concurrence, a statement to this effect be included in the legislative proposal and that the relevant clauses be identified at the time of introduction to the appropriate standing committee. Committee further recommends that a bill should not be submitted to the federal government for their concurrence until after it has been reported back to the House following committee's review.
The committee held public meetings in Inuvik, Norman Wells, and Yellowknife. A scheduled hearing for Fort Simpson was cancelled on request of the community. Numerous representatives of Indigenous governments, non-governmental organizations, and individuals made public representations to the committee, either in person or via written submissions. Written submissions are attached as Appendix 1.
Comments were received from seven stakeholders, including:
Alternatives North, Ecology North, CPAWS-NWT, and the Canadian Arctic Resources Committee (CARC) joint submission;
The Information and Privacy Commissioner of the Northwest Territories;
Non-Profit Governance Solutions (Dr. Cody Sharpe) on behalf of Ecology North;
NWT Metis Nation;
NWT Chamber of Commerce;
Sahtu Secretariat Incorporated; and
Todd Slack (as individual).
The standing committee heard general support for the bills from presenters and received recommendations for improvements. Committee thanks every individual and organization who attended these meetings to share their views on Bill 36 and Bill 37.
The committee appreciates the plain-language material supplied by the Minister's office for the public hearings.
After having sought clarification from the sponsoring department, the committee considered the comments received during public hearings and discussed these matters amongst its members. Committee submitted eight motions in total to amend Bill 36 and Bill 37.
Mr. Speaker, at this time, I will turn the reading over to my honourable colleague from Nunakput, MLA Nakimayak. Thank you, Mr. Speaker.
Masi. Member for Nunakput.
Thank you, Mr. Speaker.
What We Heard
This part of the report is organized around the key themes or subject areas raised during the committee's public hearings and in the written submissions received.
Confidentiality in Bill 36
Committee appreciates the steps taken by the Department of Industry, Tourism and Investment to improve and modernize Bill 36 and Bill 37 by amending the confidentiality provisions in both bills. Improving accountability and transparency is a fundamental component of the Government of the Northwest Territories' Mandate. Ensuring in legislation that all information is made available while determining certain criteria for confidentiality is contributing to achieving a better balance between increasing transparency and the need to protect confidential information.
Stakeholders commented on the importance of transparency in all aspects of regulating oil and gas-related activities in the Northwest Territories. One stakeholder remained unconvinced that the bills strike the appropriate balance between confidentiality of proprietary information and public transparency. Currently, all information provided for the purposes of the Petroleum Resources Act and the Oil and Gas Operations Act, and the regulations under those acts, is deemed privileged and kept confidential, with few exceptions.
Bills 36 and Bill 37 change this and reverse the process in that all information required to be provided will be made available to the public unless the recipient of the information, which would be either the Minister or the Regulator, determines the information meets the test for confidentiality. Committee recognizes and supports this important step in the modernization of the legislation.
Role of Minister and Regulator
The Regulator is designated by the Commissioner in Executive Council under the Oil and Gas Operations Act (OGOA). The Minister has designated the regulator, however, delegated those powers to the Executive Director of the Office of the Regulator of Oil and Gas Operations (OROGO). Generally speaking, the Minister of Industry, Tourism and Investment has stronger responsibilities under the Petroleum Resources Act, and the regulator has a more robust role under the Oil and Gas Operations Act.
Committee received several comments on the importance that the roles of Minister and regulator do not overlap or interfere with either mandate. For example, where the Minister has the authority to classify information as confidential, this discretion must not overlap or infringe on the authority of the regulator. It was pointed out clearly that the regulator must be an independent decision-maker, if its rulings are to be viewed by the public as being free from political interference. However, there also was a clear desire expressed for more clarity around what information the Minister and the regulator should make publicly available. Committee considered carefully these concerns when discussing publication and annual report requirements.
Publication Requirement in Bill 36
Committee heard a number of comments on what is required to be published in the Petroleum Resources Act. Currently, the Minister is required to post notices in the Government of the Northwest Territories Gazette and "in any other publication the Minister deems appropriate"; this was seen as too vague. Stakeholders asked to improve the transparency of government decisions by setting out where the notices should be published.
Committee heard that the Gazette is an antiquated system of public notification and that it cannot be considered widely used. It was suggested that information be made available on websites or electronically to broaden the reach and accessibility of the information. Committee agreed that specifying where information needs to be made available is consistent with the Government of the Northwest Territories' Open Government Policy and the commitment to make information accessible in a way that is responsive to the needs and expectations of Northwest Territories residents.
Committee also wanted to ensure that information is being made accessible consistently and is user-friendly. Committee therefore moved Motion 1, which requires the administering department to publish information in the Gazette, make information public more widely, and publish it in a timely manner on a website.
Mr. Speaker, I now pass this on to the honourable Member for Hay River North. Thank you, Mr. Speaker.
Masi. Member for Hay River North.
Thank you, Mr. Speaker.
Content of Annual Report
A commitment to improving accountability and transparency is one of the key priorities of the 18th Legislative Assembly. Public information is expected to be clear, concise, and easily understood. Committee agreed with submitters of comments that making information available will increase public confidence in the regulatory process.
Having the information, year over year, compiled in one place proves of interest and value in the context of accountable and transparent governance. The value of an annual report is the ability to have flexibility around how information is presented so as to allow the reader to put it clearly in context. The regulator already voluntarily prepares and publishes annual reports on activities, which is not required by legislation. The Minister is required to prepare a report with respect to the administration of the Petroleum Resources Act. The committee is of the view that contents of the report should be set out in legislation.
To provide greater clarity for the annual report that is required under the existing legislation, the licences and information issued, for example, can be provided by the Minister. Committee developed two motions that would link several sections and result in collaboration between the regulator and the Minister and annual reporting. This is reflected in Motion 2. The committee also proposed amendments that would set forth a list of information that should be included in the annual report of the Minister, which is reflected in Motion 6 amending Bill 36.
Well Abandonment and Financial Responsibility in Bill 37
Committee heard concerns and sought clarification on the commencement of the one-year period during which an operator must maintain proof of financial responsibility. Committee also had questions on the environmental remediation triggers within the respective reporting year.
During committee's deliberations on how the timing of the one-year period is determined, it was confirmed that abandoning a well is included in the definition of well operation, and that all operations require approval from the regulator. The holder of an authorization must maintain proof of financial responsibility for one year after the Office of the Regulator of Oil and Gas Operations has given notice to the proponent that all authorized works in respect of the abandonment of a well are completed. The extent of reclamation to be carried out before the notice would be issued depends on the approved work plans rather than statutory definitions respecting reclamation.
While committee is confident that concerns regarding the one-year period are addressed in regulations, the general question of assessing financial liability in resource management was raised. Committee is of the view that there needs to be further consideration of how to best ensure that end-of-life obligations are addressed in order to protect the government and residents of the Northwest Territories from potential liabilities.
Due to recent court cases, such as the Redwater case, committee is of the view that decisions which relate to terms of financial responsibility need to be reviewed on their consistency with recent court decisions. Therefore, committee makes the following recommendation.
Recommendation 2
Committee is of the view that the cap for financial liability, which is currently set out in regulations, needs to be reviewed and aligned with Canadian practices. The Oil and Gas Spills Debris Liability Regulations were inherited from the federal government with devolution and have not been updated. Since 2014, however, the federal legislation governing offshore oil and gas exploration was updated to increase the absolute liability cap to $1 billion following a review by the Auditor General of Canada. Committee therefore makes the following recommendation.
Recommendation 3
I will now pass the reading on to the Member for Frame Lake. Thank you, Mr. Speaker.
Masi. Member for Frame Lake.
Merci, Monsieur le President.
Bill 36 establishes a term of 15 years for significant discovery licences (SDL) where previously exclusive rights to petroleum lands were granted for an indefinite time. Committee received submissions that questioned the 15-year term and were seeking answers on why this number was chosen. Considering term limits in other jurisdictions while taking into account the unique conditions of the Northwest Territories, committee believes that 15 years is a time limit that would allow industry to do work and still insert a time-bound requirement.
Several submissions accepted the 15-year term of SDLs, however expressed a preference for a set time limit on the renewal term for SDLs. Bill 36 provides the Minister with the discretion to make a decision that would have an SDL being considered for an extension. This discretion was seen by several stakeholders to be concerning for two reasons: first, placing the authority with the Minister allows the possibility of political interference in what should be a regulatory function; and secondly, the ability to indefinitely renew an SDL would allow companies to potentially hold territorial lands indefinitely.
Committee shares these concerns and believes that a licence renewal should be time-bound. Consequently, committee proposed in Motion 3 to amend the current wording and require that an extension of the term of a SDL licence is for one or more terms of 15 years.
Committee had intensive discussions on the mechanism of SDLs and whether it is the best approach to ensure that the Northwest Territories will benefit from oil and gas exploration. Making SDLs time-bound by setting a time limit on the term of licence and licence renewal was considered a positive step toward a more transparent and accountable system. However, to maximize benefits to the Northwest Territories, committee is suggesting a more comprehensive review of the SDL system, including consideration of models for oil and gas exploration in other jurisdictions.
Therefore, committee is making the following recommendation.
The Standing Committee on Economic Development and Environment recommends that, in phase two of the review of Northwest Territories oil and gas legislation, a comprehensive evaluation of options related to Significant Discovery Licences (SDLs) be conducted, providing alternatives for consideration, and table its findings during the 19th Legislative Assembly. Committee further recommends that this report identify how the findings will inform any future changes to be made by the Government of the Northwest Territories with respect to its oil and gas resources.
Several submissions commented on the new provisions on the Environmental Studies Management Board (ESMB). Committee heard that the ESMB's public legitimacy would be improved by setting terms for the appointment of the members. Currently, members are appointed by the Minister and hold office during pleasure. Committee gave this suggestion consideration, however is not able to propose term requirements. The term of board members is determined under subsection 70(2) of the Petroleum Resources Act, and this subsection is not included for amendment. Therefore, a motion to set terms would be out of scope and not applicable.
Committee heard that, for the appointment of members to the ESMB, a clear definition of number of appointments by interest group should be provided in legislation. Stakeholders asked that public representation should be ensured. The definition of membership representation was seen as an improvement to the public legitimacy of the ESMB.
Committee agreed with the need for clarity on board membership and proposed an amendment that would ensure that at least one member from the public will be serving on the ESMB. To further ensure that the appointment of members from the public would allow for a balanced representation, committee moved Motion 4, which requires the Minister to appoint one member from the public for a board with the size of five or less members, and two members from the public for a board with six or more members.
Committee received several submissions from Indigenous governments and organizations, as well as non-government organizations, asking for an addition to the definition of hydraulic fracturing fluid. Bills 36 and 37 propose a comprehensive definition for hydraulic fracturing, including the requirement that the cubic metre volume of water injected into a well be measured. In their submissions, some stakeholders proposed to include the requirement to collect data on volume of fluids recovered from wells.
Committee agreed that knowledge of the volume of fluids recovered is important to better understand how much fluid may be left underground. Committee therefore moved Motion 5 to Bill 36 and Motion 2 to Bill 37 to amend the definition of hydraulic fracturing fluid information to be collected and to include information on the fluid recovered from wells.
In the context of hydraulic fracturing in the Northwest Territories, committee members discussed initiatives of past Legislative Assemblies. It was noted that, during the 17th Assembly, the Government of the Northwest Territories proposed to improve the regulatory framework by drafting new regulations. In its current mandate, the Government of the Northwest Territories committed to "ensure that residents have meaningful opportunities to participate in the assessment of potential benefits and risks associated with resource development, including hydraulic fracturing."
Committee is making the observation that the Government of the Northwest Territories has chosen to address mandate commitment 1.1.10 through the amendment of its oil and gas legislation and presentation of Bill 36 and Bill 37.
Mr. Speaker, I would like to turn over the next part of the report to the honourable Member for Kam Lake. Mahsi.
Masi. Member for Kam Lake.
Thank you, Mr. Speaker. Thank you, colleagues.
Bill 37 proposes that the regulator be authorized to hold public hearings, however, leaves it to the discretion of the regulator to determine when a public hearing would be in the public interest. Committee members discussed regulatory practices in the Northwest Territories, where public hearings are obligatory. In resource development, thresholds are set, for example, for various types of water use and waste disposal, which determine when public hearings must be advertised and conducted.
Committee is of the view that the regulator should establish a threshold to identify when public hearings should be conducted. This would create consistency and certainty for applicants and other stakeholders as to when public hearings must take place. It would also allow consistency with other regulators and their approach.
Committee prepared a motion proposing that a subclause be added to require that the regulator issue and publish guidelines setting out the circumstances in which a public hearing must be held. The Minister did not concur on this motion.
The clause-by-clause review of the bill was held on August 2, 2019. The committee thanks the honourable Minister of Industry, Tourism and Investment, and members of his staff, for their appearance before the committee.
At this meeting, the committee moved six separate motions to amend Bill 36, which were all concurred with by the Minister. Committee moved two separate motions to amend Bill 37, and one found concurrence by the Minister.
That clause 4 of Bill 36 be amended:
(a) in proposed clause 18 by striking out
(b) in that portion of proposed clause 18.1 preceding paragraph (a), by striking out
"shall make publicly available" and substituting "shall publish, in a timely manner, on a website maintained by the department responsible for the administration of this act."
The motion was carried, and the Minister concurred. The bill will be amended accordingly.
That clause 4 of Bill 36 be amended by adding the following after proposed clause 18.1:
8.2. A report prepared by the Minister under section 98 shall include a list of
(a) the notices published under section 18; and
(b) the information made available to the public under section 18.1.
The motion was carried and the Minister concurred. The bill will be amended accordingly.
That clause 9 of Bill 36 be amended in that portion of proposed subclause 32(4) preceding paragraph (a), by striking out "extend the term of a significant discovery licence if" and substituting "extend the term of a significant discovery licence, for one or more terms of 15 years, if."
The motion was carried, and the Minister concurred. The bill will be amended accordingly.
That clause 14 of Bill 36 be amended by striking out subclause (5) and substituting the following:
(5) Notwithstanding subsections (2) to (4), if the number of members of the board is fixed
(a) at five or less, the Minister shall appoint one member of the public to the board; or
(b) at six or more, the Minister shall appoint two members of the public to the board.
The motion was carried, and the Minister concurred. The bill will be amended accordingly.
That clause 16 of Bill 36 be amended in proposed subclause 91(1) in the proposed definition "hydraulic fracturing fluid information" by adding the following after paragraph (k):
(k.1) the total volume of fluid, in cubic metres, recovered from the well,
The motion was carried, and the Minister concurred. The bill will be amended accordingly.
That clause 16 of Bill 36 be amended by adding the following after proposed subclause 91(9):
(9.1) A report prepared by the Minister under section 98 shall include a list of the information made available to the public by the Minister under this section.
The motion was carried, and the Minister concurred. The bill will be amended accordingly.
That clause 5 of Bill 37 be amended by renumbering proposed clause 19.1 as subclause 19.1(1) and adding the following after that renumbered subclause:
(2) The regulator shall issue and publish guidelines setting out the circumstances in which a public hearing must be held.
The motion was carried by committee. The Minister did not concur. Not carried.
That clause 7 of Bill 37 be amended in proposed subclause 22(1) in the proposed definition "hydraulic fracturing fluid information" by adding the following after paragraph (k):
(k.1) the total volume of fluid, in cubic metres, recovered from the well,
The motion was carried, and the Minister concurred. The bill will be amended accordingly.
Now I will turn the reading of this report over to the honourable Member for Yellowknife North. Thank you, Mr. Speaker.
Masi. Member for Yellowknife North.
Thank you, Mr. Speaker.
The committee commends the Minister for his willingness to work with committee to further amend Bill 36 and Bill 37 in response to public interest and to work collaboratively with committee on the amendments.
The committee thanks all those who took the time to appear before committee to share their thoughts on this legislation.
Following the clause-by-clause review, motions were carried to report Bill 36, An Act to Amend the Petroleum Resources Act, and Bill 37, An Act to Amend the Oil and Gas Operations Act, as amended and reprinted, as ready for consideration in Committee of the Whole.
Rule 100(5) of the Rules of the Legislative Assembly of the Northwest Territories requires Cabinet, in response to a motion by committee, to table a comprehensive response that addresses the committee report and any related motions adopted by the House. As required by this rule, committee usually includes a recommendation in each report, which is moved as a motion in the House, requesting a response from government within 120 days. Given that the 18th Legislative Assembly will dissolve prior to the conclusion of the 120-day time period allowed by the rules, committee has opted to forego this recommendation. Committee nonetheless requests, to the extent that it is possible before the dissolution of the 18th Assembly and for the public record, that government provide a response to this recommendation, even of a preliminary nature, that committee may publicly disclose.
This concludes the standing committee's review of Bills 36 and 37. Thank you, Mr. Speaker.
Masi. Reports of standing and special committees. Member for Yellowknife North.
Thank you, Mr. Speaker. I seek unanimous consent to waive rule 100(4) and to have committee report 25-18(3), Standing Committee on Economic Development and Environment Report on the Review of Bill 36, An Act to Amend the Petroleum Resources Act, and Bill 37, An Act to Amend the Oil and Gas Operations Act, moved into Committee of the Whole for consideration later today. Thank you, Mr. Speaker.
Masi. The Member is seeking unanimous consent to waive rule 100(4) to have Committee Report 25-18(3) moved into Committee of the Whole for consideration later today.
---Unanimous consent granted
Bill 36, An Act to Amend the Petroleum Resources Act, and Bill 37, An Act to Amend the Oil and Gas Operations Act is now moved into Committee of the Whole for consideration later today. Reports of standing and special committees. Member for Kam Lake.
Thank you, Mr. Speaker. Your Standing Committee on Government Operations is pleased to present its Report on the Review of the Carbon Tax Bills, Bill 42, An Act to Amend the Petroleum Products Tax Act, and Bill 43, An Act to Amend the Income Tax Act, and commends it to the House.
The Standing Committee on Government Operations ("the committee") is pleased to report on its review of Bill 42, An Act to Amend the Petroleum Products Tax Act, and Bill 43, An Act to Amend the Income Tax Act, collectively referred to as the carbon tax bills.
The carbon tax bills, sponsored by the Government of the Northwest Territories (GNWT) Department of Finance, were given second reading in the Legislative Assembly and referred to the Standing Committee on Government Operations for review on March 8, 2019. When passed, these bills will implement a carbon tax in the Northwest Territories.
Bill 42 proposes to amend the Petroleum Products Tax Act to:
Impose a carbon tax on petroleum products and natural gas;
Clarify that all existing provisions in the act related to the current fuel tax are noted as such;
Provide an exemption from the fuel tax for petroleum products delivered to or purchased by an Indian or Indian band on a reserve; or used by a designated municipal authority that is recognized by the Minister as representing a community;
Make the necessary amendments for collection and administration of this tax in the same manner as the current fuel tax, which requires purchasers to pay the tax, and vendors and collectors to remit the tax to the GNWT;
Allow the Minister to provide in regulations for rebates and grants;
Increase the maximum fines and penalties which may be imposed as administrative penalties or on summary conviction; and
Set out a process for the appeal of an assessment of tax, interest, or administrative penalties under the act.
Bill 43 proposes to amend the Income Tax Act to provide a cost-of-living offset as a mechanism for returning carbon tax revenues to Northwest Territories residents.
Bill 43 also proposes to amend the Income Tax Act to make changes in non-refundable tax credits claimed by multi-jurisdictional tax filers, including changes that restrict the Northwest Territories pension credit to NWT residents and changes that allow full pension and dividend credits to be claimed by NWT residents with business income earned outside the Northwest Territories.
This amendment, which is not related to the implementation of the carbon tax, arises out of discussions between the Department of Finance and the Canada Revenue Agency aimed at harmonizing the provincial-territorial tax treatment of pension and dividend tax credits for multi-jurisdictional tax filers. It will have the effect of denying NWT pension credits to non-residents with business income earned in the NWT and allowing full pension and dividend tax credits to NWT residents with business income earned outside the NWT.
As a signatory to the Pan-Canadian Framework on Clean Growth and Climate Change, the GNWT made a commitment to implement carbon pricing in the Northwest Territories. This tax on fuels that emit greenhouse gases (GHGs) is intended to encourage residents and businesses in the Northwest Territories to reduce fuel consumption. Along with the provinces and other territories, the GNWT was given the option by the federal government to implement its own approach to carbon pricing, provided that approach is consistent with the federal approach. For those jurisdictions choosing not to implement their own approach, Canada advised that it would impose its approach, often referred to as the "federal backstop." The GNWT opted to implement its own approach to carbon pricing, the details of which were publicly released in July 2018.
The GNWT communicated early and frequently with committee on this work as it progressed, including providing three presentations on the GNWT's proposed approach prior to its public release. The first of these took place in June 2017, prior to the public release of the GNWT's Discussion Paper on Implementing Pan-Canadian Carbon Pricing in the Northwest Territories. During this time period, committee wrote twice to the Finance Minister raising concerns that the GNWT's approach did not set out options for public debate; the proposed 75 percent direct rebate for large emitters was too high; there was no rebate or special measures for small businesses; and the policy objectives of the carbon tax were not clearly articulated.
According to the GNWT's plain-language summary of Bill 42, the "federal government reviewed and approved the planned approach in September 2018, and Bill 42 and Bill 43, which are needed to implement carbon pricing, were tabled in the NWT Legislative Assembly in March 2019." Committee was not advised that the federal government had "approved" the planned approach in September, which occurred while the committee was in the process of considering the legislative proposal for the carbon tax bills.
In November 2018, the committee again wrote to the government, advising that it does not support the proposal in its current form and reiterating its concerns that the 75-percent rebate for large emitters is too high and that there are no specific measures for small businesses. To this, committee added its concern that the rebates to individuals can only be claimed by filing taxes. Committee also expressed its concern that there was no indication from government as to whether or not the carbon tax legislation would mandate public reporting to enable transparency, increase public awareness of how the tax revenue is being used, and measure the impact of the carbon tax on emissions in the NWT.
While the GNWT was very forthcoming with respect to its discussions with the federal government on the GNWT's proposed approach, there was little actual engagement with committee to allow Regular Members to have input into the development of this approach. As noted, committee wrote several letters to the Minister raising committee's concerns with the proposed approach. In retrospect, committee does not feel that its input was given due consideration, nor was it made clear to committee that the information being shared was for information purposes only and that the input of Regular Members was not being sought.
Committee understands that the GNWT's proposed approach to carbon pricing in the Northwest Territories was negotiated with the federal government, leaving little room for input from Regular Members once that process had commenced. The lesson here, from the committee's perspective, is that earlier engagement of Regular Members, including engagement on the discussion of whether or not the GNWT should pursue its own approach, should have taken place.
This would have afforded Members the opportunity to debate issues such as the relative merits of differing policy approaches to reducing greenhouse gas emissions, such as a cap-and-trade system versus a carbon tax. It would have also allowed for dialogue about lessons learned from other jurisdictions such as British Columbia, which has had a carbon tax in place since 2008 and where the Minister is required to present annual plans to the provincial legislature setting out the amount of tax revenue anticipated.
Bills 42 and 43 were introduced in the Legislative Assembly, given first and second reading, and referred to committee for review on March 8, 2019.
Now, Mr. Speaker, I will turn the reading of this report over to the honourable Member for Sahtu.
Masi. Member for Sahtu.
Thank you, Mr. Speaker.
Rule 75(1) of the Rules of the Legislative Assembly provides that a bill referred to a standing committee "shall not be proceeded with until the Assembly receives the report of the committee or 120 calendar days pass from the day the bill was given second reading." Convention provides that, should the 120-day period expire while the House is not sitting, committee must report the bill on the first day of the next sitting of the Legislative Assembly.
On June 5, 2019, the Finance Minister made a statement in the Legislative Assembly advising that the GNWT now intended to implement a carbon tax in the Northwest Territories on September 1, 2019. This statement, which appeared to be directed at the federal government, suggested that there was a delay in the legislative process and that "this delay was unintended and in no way should be considered as a lowering of the government's commitment to implementing the NWT carbon tax."
Given that the 120-day period allowed for the review of Bills 42 and 43 expired well after the spring sitting of the Legislative Assembly, committee is of the view that it has been required, from the outset, to report the bills on August 12, 2019, the first day of the final sitting of the 18th Legislative Assembly, regardless of the GNWT's planned July 1, 2019 carbon tax implementation date. While it is perhaps moot at this point in the terms of the 18th Assembly, committee nonetheless encourages Cabinet Ministers to keep in mind the time allowed by the rules for standing committee review of bills when planning its legislative calendar.
Before commencing its review of Bills 42 and 43, committee undertook to analyze and compare the GNWT's approach with the federal backstop, which is based on Canada's output based pricing system. This system establishes emission intensity standards for various large industrial sectors based on average emissions per unit of output.
Committee found it challenging to assess the salient differences between the two approaches. While Finance provided ample material regarding the GNWT's proposed approach, the key features of the federal backstop were more difficult to ascertain. For example, Finance provided committee with a figure indicating the estimated "effective carbon tax" for small emitters under the GNWT's approach, which is the average carbon tax per tonne of emissions. Committee asked both Finance and Environment and Climate Change Canada for the corresponding figure under the federal backstop. Committee also requested information on the annual net carbon tax revenues deriving from small emitters under the federal output based pricing system.
The GNWT's response, while detailed, did not provide committee with the figures it sought. The response from the federal Minister of Environment and Climate Change Canada completely disregarded committee's inquiries, instead referring committee to public information on the Government of Canada's website about the output based pricing system that is technically detailed and not specific to the Northwest Territories. Similarly, a lack of detail about the federal government's approach to offsetting the carbon tax for small businesses and municipalities, made direct comparisons with the GNWT's proposal difficult.
Mr. Speaker, I pass the rest of the reading on to the Member from the Deh Cho. Thank you.
Masi. Member for Deh Cho.
Mahsi, Mr. Speaker.
Committee originally planned to hold public meetings in Fort Providence, Hay River, Inuvik, and Yellowknife. However, on May 8th of this year, two thirds of the way through the formal 120-day review period, committee was notified in writing by the Finance Minister that the GNWT had revised its carbon tax approach for large emitters, those emitting 50,000 tonnes or greater of annual greenhouse gas emissions. This was of concern to committee, which already felt that the GNWT's proposed approach to large emitters was too generous. Committee was advised that this adjustment was necessary to better align the GNWT's approach with the federal backstop, details of which were only released by Canada in December 2018.
Committee had hoped that additional information about this change in approach would be made public by the Minister during the May-June sitting, including details provided in confidence to committee. When this information was not shared with the public, committee subsequently issued a news release on June 7th advising of its decision to postpone the planned public consultations until more information was provided by the Department of Finance.
Committee asked that as much detail as possible related to the committee's specific questions be shared with the public. Unfortunately, as with much of the other information shared by Finance with committee, the responses to these questions were marked "Confidential - Not for Distribution." This is particularly vexing with respect to Bills 42 and 43, where the majority of the GNWT's proposal is not contained in the legislation itself but in regulations and other public policy instruments.
Committee is not at liberty to disclose information provided in confidence by Cabinet Ministers. Unfortunately, the large majority of the correspondence received by committee from the Finance Minister on this initiative, including responses to committee's questions, was marked confidential, thereby prohibiting committee from publicly disclosing its contents. This also inhibited committee's ability to engage in a meaningful consultation. For example, committee's inability to disclose the information contained in Finance's May 8 letter rendered committee unable to explain to the public, even with the writing of this report, how the GNWT's approach to large emitters has changed.
Committee wrote to the Minister requesting plain-language explanations of Bills 42 and 43 that could be shared with the public.
Committee wishes to take this opportunity to thank the Minister for responding positively to the committee's request by preparing plain-language summaries of both bills that could be shared with the public. It is committee's experience, based on consultations undertaken over the course of the 18th Assembly, that simple, straight-forward information for NWT residents outlining the purposes of changes to the law and the impact of those changes is vital to obtaining meaningful input from the public. Too often, committee finds itself having to explain government-sponsored bills, leading to confusion about the role of standing committees and the legislative process. Accordingly, committee makes the following recommendation.
The Standing Committee on Government Operations recommends that, for all bills proposing to establish, replace, or make significant changes to territorial legislation, a plain-language summary be prepared and made available to the appropriate standing committee at the time the bill is introduced in the Legislative Assembly.
Committee sent out a second news release on July 15th, indicating that it still lacked sufficient detail to enable committee to adequately answer questions from the public on these Finance-sponsored bills. This consideration, along with timing constraints, led committee to the decision to request written submissions from the public and hold a single public meeting in Yellowknife on August 1st.
Mr. Speaker, I now pass on the reading responsibilities to my honourable colleague, to my colleague for Hay River North.
Masi. Member for Hay River North.
Thank you, Mr. Speaker.
Committee received four submissions on Bills 42 and 43. These submissions from the NWT Association of Communities (NWTAC), the City of Yellowknife, Arctic Energy Alliance, and a joint submission from Ecology North and Alternatives North are appended to this report. A representative of the NWTAC also attended committee's public hearing to present the association's submission.
While the submission from the NWTAC indicates general support for the GNWT's approach over the federal backstop, it points out that, without a cost-of-living offset, the carbon tax will end up costing municipalities. This is occurring at a time when the GNWT has acknowledged a significant gap between municipal funding needs and funding support received from the territorial government. In fact, the NWTAC submission alleges that when this concern was raised with the Department of Finance, municipalities were advised that they would "just have to increase their property taxes." Committee is dismayed to hear such a report and feels that more should have been done in the GNWT's approach to mitigate the impacts of the carbon tax on underfunded local authorities. Accordingly, committee makes the following recommendation.
The Standing Committee on Government Operations recommends that the Government of the Northwest Territories, led by the Department of Municipal and Community Affairs, complete its work to assess the municipal funding gap on an urgent basis, taking into consideration the increased costs of the carbon tax to all local authorities, and that additional forced growth funding to compensate for these costs be included in the 2020-2021 budget.
The City of Yellowknife's submission also notes chronic underfunding by the GNWT and points out that, while the NWT houses 50 percent of the territories' population, none of the projects identified in the 2030 energy plan over the next five years are scheduled for Yellowknife. The city recommends making revenues available to community governments in order to support actions set out in their Community Energy Plans. Committee notes that the GNWT's Department of Infrastructure administers a GHG Grant Program for Government, which is designed to fill a gap in funding for larger GHG reduction initiatives. Under this program, in place until March 31, 2022, applicants may be eligible to receive up to 75 percent of eligible project costs.
The City of Yellowknife's submission points out that "if the proposed carbon pricing regime does not accomplish a reduction in GHG emissions it has merely created an unnecessary administrative burden and cost to residents and businesses," recommending that "the GNWT re-evaluate the program after implementation to ensure that it is making a difference."
This recommendation for program evaluation is also contained in the joint submission from Ecology North and Alternatives North, which recommends that there should be "an annual reporting mechanism that evaluates and measures the effectiveness of the tax in meeting its purpose."
Committee fully agrees that there should be both annual reporting on the carbon tax and program evaluation to determine the effectiveness of reducing GHG emissions in the Northwest Territories and to guide future policy decisions. Committee raised these issues during its in-camera discussions with and correspondence to the Department of Finance.
Committee also sought the advice of the law clerk regarding the potential to amend Bill 42 to include reporting requirements. Committee was advised that such an amendment would likely be ruled out of the scope of the bill given that there are no provisions currently contained in the Petroleum Products Tax Act mandating reporting and that the scope of the bill is narrowly defined to allow for the imposition of the tax and the provision of grants and rebates through regulation.
During the clause-by-clause review of Bills 42 and 43, the Minister indicated that he had made a commitment to committee that the department would undertake annual reporting on the carbon tax. While committee is pleased to hear this, a commitment made during an in-camera discussion did not carry the weight of a public commitment. Therefore, to provide for this public commitment, committee makes the following recommendation.
The Standing Committee on Government Operations recommends that the Department of Finance table an annual report in the Legislative Assembly on the carbon tax that provides details on total carbon taxes collected; carbon taxes collected from large emitters; total rebates provided; number and nature of grants provided; costs of administering the carbon tax; reinvestment of carbon tax revenues; projected tax revenues for coming year; and an annual plan for future year reinvestment of carbon tax revenues.
With respect to program evaluation, committee makes the following recommendation.
The Standing Committee on Government Operations recommends that the Department of Finance undertake an annual assessment of the impacts of the carbon tax on greenhouse gas emissions in the Northwest Territories to be reported in the annual report. This should be integrated with the reporting on GHG emissions under the Climate Change Strategic Framework and energy projects under the Energy Strategy. This will allow an evaluation of whether the carbon tax is effective in reducing GHG emissions.
The standing committee further recommends that the Department of Finance undertake a comprehensive review and evaluation of its carbon tax approach, including public consultation, to be completed after the program is fully implemented in 2022. The purpose of review is to determine the effectiveness of the program on reducing GHG emissions and to assess its impacts on the NWT economy in order to develop program improvements.
The submission received from the Arctic Energy Alliance asked committee to consider the inclusion of a provision in the Petroleum Products Tax Act to allow for the disclosure of fuel sales data at the community level to address significant gaps in the organization's knowledge of energy use in the Northwest Territories. The committee is sympathetic to this request and Members appreciate that good data is essential to well-informed, evidence-based decision making. Unfortunately, the same issues of scope that prevented committee from including annual reporting requirements in Bill 42 also prevent the inclusion of a clause mandating the release of this information as it is not related to the collection or expenditure of carbon tax revenues.
I will now pass the reading on to the Member for Kam Lake.
Masi. Member for Kam Lake.
Thank you, Mr. Speaker. Thank you, colleagues.
The clause-by-clause review of the bill was held on August 7, 2019. Committee thanks the honourable Minister of Finance and his officials for their appearance before the committee. Committee did not move any motions to amend Bills 42 or 43.
Rule 100(5) of the Rules of the Legislative Assembly of the Northwest Territories requires Cabinet, in response to a motion by committee, to table a comprehensive response that addresses the committee report and any related motions adopted by the House. As required by this rule, committee usually includes a recommendation in each report, which is moved as a motion in the House, requesting a response from government within 120 days. Given that the 18th Legislative Assembly will dissolve prior to the conclusion of the 120-day time period allowed by the rules, committee has opted to forego this recommendation. Committee nonetheless requests, to the extent it is possible before the dissolution of the 18th Assembly and for the public record, that government provide a response to the recommendations contained in this report, even of a preliminary nature, that committee may publicly disclose.
This concludes the Standing Committee's review. Thank you, Mr. Speaker.
Thank you, Mr. Speaker. I move, seconded by the honourable Member for Hay River North, that Committee Report 26-18(3): Standing Committee on Government Operations Report on the Review of the Carbon Tax Bills, Bill 42: An Act to Amend the Petroleum Products Tax Act and Bill 43: An Act to Amend the Income Tax Act be received by the Assembly and moved into Committee of the Whole for further consideration. Thank you, Mr. Speaker.
Masi. The motion is in order. The motion is non-debatable. All those in favour? All those opposed?
---Carried
Thank you, Mr. Speaker. I would like to take the opportunity to recognize Fernanda Martins, the executive director of the NWT chapter for the Canadian Cancer Society and a Yellowknife North resident. Welcome.
I would also like to take this opportunity to recognize four Pages from the riding of Yellowknife North; Zefer Jordison, Lea Schwarz, Jaylen Base-Smith, and Quinton Base-Smith. Thank you all for the tremendous work you do for us here in the Assembly. Thank you, Mr. Speaker.
Masi. Recognition of visitors in the gallery. If we missed anyone in the gallery, thanks for being here with us. It is always nice to have an audience as part of our proceedings. Masi. Item 7, acknowledgements. Colleagues, at this point in time, we are going to call for a short break.
---SHORT RECESS
Thank you, Mr. Speaker. Earlier on, I spoke about the amount of salmon being caught in fish nets across Nunakput, and my questions are for the Minister of ENR. Mr. Speaker, my first question is: has the department responded to communities who are experiencing higher than normal salmon catches this season? Thank you, Mr. Speaker.
Masi. Minister of Environment and Natural Resources.
Thank you, Mr. Speaker. There is currently a University of Manitoba Department of Fisheries and Oceans Salmon Research Project addressing the issue of salmon being captured in the Canadian Arctic in more places and in seemingly higher numbers than ever before.
Locally, in our office, there is an assistance program, CIMP, with community members taking any salmon that local residents wish to provide to the research program. The project actually is to see why there is starting to be large numbers of salmon in the Canadian Arctic. There are year-to-year changes in the harvest levels which are likely related to changing environmental conditions in the salmon population. Thank you, Mr. Speaker.
Earlier on, the Minister made a statement about funding for community-based projects, and this sounds like a project that can increase capacity in the region. Mr. Speaker, this increase has salmon has been occurring for a few seasons in higher numbers, but this year has been quite noticeable. My question to the Minister is, will ENR partner with the Department of Fisheries and Oceans, hunters and trappers committees in the Northwest Territories in tracking these invasive species?
We work with a DFO researcher who leads the Arctic salmon research project in partnership with the local and resource boards to track salmon in the Arctic. The Member is absolutely correct. The NWT CIMP that I announced before actually supports the project and has promoted research through its regular, northern research bulletins.
I appreciate the response from the Minister. What about the Arctic char, the coney, the whitefish and the herring, and other fish species that we rely on in the Arctic? They make up a high percentage of food and nutrients for Nunakput residents. This can be looked at as a threat to our food security, not just in Nunakput, but all communities across the territories. My question is: what will the department do to ensure the planning for community-based monitoring of these species, as well as other type of species that are now entering our waters, for the fall season as the ice will set in and the nets are put under the ice in the communities across the Northwest Territories?
As the Member mentioned before, there are a lot of changes that are going on, and we have heard that about a lot of species that we have seen in some places that they are not used to being seen there. The Arctic Salmon Research Project is actually looking into what the appearance of salmon means to the native fish species. The lead researcher regularly reports back to the community, and my understanding is the project does rely on some of the salmon that is turned in by community fishers, and my understanding, again, there are a couple of different value gift cards that are available to community members who turn in a full salmon or a salmon head. I think there is more information that could be obtained as to what that consist of and, if the Member wants or if the community doesn't have access to that information, I will be sure that they get it.
Masi. Oral questions. Member for Kam Lake.
Thank you, Mr. Speaker. I have questions for the honourable Minister of Finance on the state of our fibre optic telecommunications infrastructure. Has the government done any planning to investigate improving our redundancy, so when a fibre line is cut, in particular to my community of Yellowknife, but when a fibre line is cut, it doesn't knock everything out of there? Are there more options to keep the systems going so that they don't cause that massive interruption to businesses and households? Thank you, Mr. Speaker.
Masi. Minister of Finance.
Thank you, Mr. Speaker. We have raised concerns both with redundancy, with the provider Northwestel and with CRTC, and we continue to work actively with industry partners to explore viable and affordable redundancy measures. I think, with some money that has been made available by the federal government in improving northern broadband, I think one of the industry partners, Northwestel, has accessed on that money to possibly run a redundancy line down the Dempster Highway to serve that area. I take the Member's point that there needs to be redundancy looked at for this part of the Northwest Territories, and we will continue to work with our industry partners to ensure that that work is ongoing.
I thank the Minister. I think this House is well aware of the excellent work that has been done on the northern part of the territory, the fibre optic line and the future potential it has, but the southern part of the territory still has these issues; in particular, our capital of Yellowknife. Can the Minister bring the public up to date on what is known about the incidents on May the 8th, July the 13th, and August the 12th of this year where the fibre line was cut?
My understanding is three of the incidents did not occur on GNWT infrastructure. Northwestel is the owner and operator of the infrastructure associated with these three incidents. We are unable to speak on their behalf. In some cases, and I think the Member mentioned in his Member statement, there are active investigations that are under way.
Obviously, I wouldn't ask the Minister to respond on behalf of Northwestel if he has no information from them, but is the department or the Minister's office in active communication with Northwestel? They are our sole service provider in many regions of the territory. Is there a way they can coordinate better flow of information, sharing the information, when it comes to these events in the future?
My office, myself directly, have had no discussions with Northwestel. They may have had discussions with my officials, and I will follow up to see if those discussions have taken place, but with my office, personally, I have not had any conversations with them. I will reach out to department to see if we have had conversations with their officials, and, if I am able to, I will share that information with this Assembly.
Masi. Oral questions. Member for Kam Lake.
