Thank you. Please turn to page 5. We will now open the floor to general comments on the Department of Finance. Ms. Green.
Thank you, Madam Chair. I have detail questions. Is this the right time to ask those?
Thank you. Because I wear this earphone all the time, I just want to caution the Minister of Finance that she is talking before the red light goes on, so some of her answers are not being recorded. Having said that, I wonder if the Minister could give us a breakdown of the components of the cash-flow issue for which the government is seeking $135,000 in borrowing? Thank you.
Minister of Finance.
Thank you, Madam Chair. There are a number of contributing factors that are impacting on the cash flow, as we have identified them quite recently. For one, simply put, there was a much lower starting point from what had been projected; outstanding receivables from the Northwest Territories Health and Social Services Authority for repayment of their payroll, $117 million; the collective agreement resulted in increases to overall GNWT payroll, and that has impacted on the cash flow estimates; the delay in terms of federal funding that is received and that will be coming in as revenue but that doesn't necessarily arrive and is difficult to know exactly when it arrives, so that is being put through at cash flow, and that makes it difficult, even though that we know the money is coming, we just don't know exactly when; various other outstanding receivables for work being performed, again, often it's particularly for the federal government when there are initiatives under way, for example, in the health department, and they may be, in fact, fully funded, but the work is being done by the GNWT, and then there are receivables that are outstanding from those other parties.
Those are some of the examples, Madam Chair, of what has impacted on this situation. I neglected that there have also been changes in terms of the revenues that are being received. Revenues are lower, for example, with respect to the corporate taxes. Corporate taxes were expected to be a receivable and have, in fact, been below zero this year. Thank you, Madam Chair.
Member for Yellowknife Centre.
Thank you, Madam Chair. Thank you to the Minister for that response. Can the Minister commit to itemizing each of these points in a dollar amount and providing that to this committee? Thank you.
Minister of Finance.
The reason I was delaying is we are making constant efforts, and certainly Mr. Kalgutkar, I know, since bringing this matter forward has been making consistent efforts to increase the pressure to get our invoices paid and have revenues come in. The numbers are changing over time, but what we can do is certainly provide a more itemized breakdown for the Members so that they have a much clearer picture. I realize that these appear to be more like estimates, but we can provide more specific numbers at a particular point in time so that there is a better sense of where things are at, at one given moment, just acknowledging that they are changing, and we are doing what we can to help them change for the better, to the extent that that is within our control.
Member for Yellowknife Centre.
Thank you, Madam Chair, and thank you to the Finance Minister. Pick a point in time. We understand that this is not fixed. Of the $135 million that you are seeking in borrowing for cash flow purposes, how much of that will be reimbursed by the end of the fiscal year? Thank you.
Minister of Finance.
Thank you, Madam Chair. Even at present, this is probably a few days old. The current forecast of the department is to be in a slight decrease in overall cash flow by the end of the fiscal. What we are able to have repaid will depend very much on what revenues we are able to get back in.
I can assure the Member that the request to make this part of the short-term borrowing limit would stand only until the end of the fiscal year. To the extent that there would be a total increase in the short-term borrowing limit, that may well be changed significantly in time for the next fiscal strategy so that we can look at the fiscal plan over the next couple of months and try to do, frankly, a more accurate job of forecasting, to the extent that that is possible, so that we don't necessarily require as much in terms of short-term borrowing for next year. That would certainly be our hope and our intention going forward in terms of planning for the 2020-2021 fiscal year.
Thank you. Member for Yellowknife Centre.
Thank you, Madam Chair, and thank you to the Finance Minister for that information. Can the Minister confirm that the bulk of this short-term borrowing is to assist with the Health and Social Services authority's payroll, which she talked about at the beginning of her answers, and can she say whether, in fact, the authority is in a position to repay this money to the Department of Finance by the end of the fiscal year? Thank you.
Minister of Finance.
Thank you, Madam Chair. I am told that the increase in the total debt to the Health and Social Services authority should be approximately $9 million, so, certainly, the increase in the short-term borrowing limit that the Department of Finance is seeking will still be there to support the health system and the health authority and their payroll.
The purpose of increasing the short-term borrowing limit is meant to be a short-term technique used in order to support all of the shorter-term and day-over-day cash requirements, including payrolls for all departments. Certainly, it is notable that it is the health department that has the single biggest item that is outstanding at this time.
Member for Yellowknife Centre.
Thank you, Madam Chair. Thank you to the Finance Minister for that. I am going to just ask the same kind of question in a different way. What capacity does the health authority or do the collective health authorities have to reimburse the Department of Finance for the payroll owing over a quite large number of years? It is, in my understanding, well in excess of $100 million. What capacity do the health authorities have to pay that money back? Thank you.
Thank you. Minister of Finance.
Thank you, Madam Chair. The simple answer is that the health authorities have limited and challenged capacity to pay the money back. That is the reason for which the Department of Finance is working with them in order to try to ensure that their own internal fiscal frameworks are as responsible, going forward, as possible.
There are a number of initiatives underway currently, partnered between Finance and the health authority, to this purpose, one example of which is the "towards a better future" initiative. That is something that has been organized between the health department and health authority as well as the Department of Finance. It is meant to be an opportunity to examine why it is that their fiscal situation is as challenged as it is. Another is to bring them into the System for Accountability & Management. That is the general system of accounting used within the finance department and within the financial system of the GNWT, generally. It is hoped that, although there are no reductions in positions or employment, but that, by doing this, we are reducing the costs of licensing fees for the financial systems that are currently being used by all the different authorities and using just one, so eliminating those licensing fees, which are significant, as well as allowing the health department to have far better data management, data organization, and data evaluation so that they can then continue their process, again in partnership with the Department of Finance, to see where they can be more efficient overall in their processing.
That is the longer version and the longer explanation, the hope therefore being that, over a short to medium term, the Department of Health and Social Services will be better placed to not be relying on the Department of Finance to be supporting payroll. Thank you, Madam Chair.
Member for Yellowknife Centre.
Thank you. What I heard in that answer was a process to quantify the problem, but I didn't hear a solution to the problem. If the health authorities are limited and challenged, as you say, to pay this money back, then is this really short-term borrowing or is this really long-term borrowing? Thank you.
Minister of Finance.
Thank you, Madam Chair. There are two different challenges. The short-term borrowing is in the Department of Finance, and that is so that the Department of Finance can manage the total finances of the Government of the Northwest Territories and be able to look at the totality of what is being demanded and needed in order to run all of the essential government programs and services, including the health authority, including their payroll, and that is the short-term borrowing aspect of it.
The health of the health department's finances is a long-term challenge, but that is not one that is being singularly solved by the request that we are putting forward here. The Department of Finance right now is supporting the health departments, who keep their employees paid and make sure that people in the Northwest Territories have access to the healthcare system in the best way possible.
Being able to quantify the problem, while unsatisfying in the short term, but from the perspective of being able to evaluate and look for efficiencies, truly understanding where those inefficiencies are is going to be critical in order for the Department of Finance to actually go in and be able to look at where there can be ways to make those processes leaner and make those processes more efficient. For us, quantifying actually is quite critical. That is a medium- and long-term solution, but it is unrelated in a lot of ways to the short-term borrowing increase that we are seeking here, which is really to get the government to the end of this fiscal year in as financially responsible a way as possible. Thank you, Madam Chair.
Thank you. I just want to encourage the Minister to keep their answers brief and allow the Members to make most of their time. I am going to move on to Member for Kam Lake.
Thank you, Madam Chair. I am thankful to the Member for Yellowknife Centre for starting off my question. We have seen continuous growth over the last few Assemblies of the short-term borrowing. I am just wondering if the Department of Finance intends to maintain the $525-million short-term borrowing limit for the 2020-2021 fiscal year or if they would eventually like to reset that to the $390-million limit that we had before. Thank you.
Minister of Finance.
Thank you, Madam Chair. We have only really just begun the internal process of looking at what the fiscal framework and fiscal policy will be, going forward. I can say, quite honestly, it is not an overt intention by any stretch to maintain a higher short-term borrowing policy or short-term borrowing limit. I am also cognizant that there seems a trend only ever upwards, and so, while I can't say what the final number will be now, the entirety of that number is still under discussion and evaluation. The intent is to look at the totality of what is happening and get a better handle on it and come to a decision. Thank you, Madam Chair.
Thank you. Member for Kam Lake.
Thank you, Madam Chair. I am curious if the Minister of Finance can speak to what actions the Department has taken to avoid going through this exercise again a year from now.
Minister of Finance.
Thank you, Madam Chair. No one would like to avoid that more than me right now. Things that are being put into place, Madam Chair, we would include simply, really, that is the entirety of the budgeting strategy and the fiscal policy strategy and ensuring that, when we create a budget, the budget needs to do a better job of being accurate in terms of the estimates going forward. We are in a totally new position, a new government, a new administration, as well, and we have the opportunity to really evaluate and question each department that comes forward and ensure that, when they bring an estimate forward, those estimates are accurate, as much as is possible. Similarly, that when they know there is something that has uncertainties around it, that we identify where those uncertainties are so that at least, if there do have to be supplementary appropriations, which there will, that we have some sense of what they are going to be in advance, as much as possible.
Member for Kam Lake.
Thank you, Madam Chair. I am also wondering if the Minister of Finance can go into detail about what, if any, reduction efforts the Department of Finance is planning to undertake, specifically in relation to positions within the GNWT and GNWT salaries. Thank you.
Minister of Finance.
Thank you, Madam Chair. There is no intention at this time to make any reductions of any sort, and it is our hope that that will not be needed in the course of this administration, if possible. We are right at the beginning of a new government, right at the beginning of a new administration, and we simply want to do our best to be fiscally responsible in a way that is transparent. Thank you, Madam Chair.
Thank you. Member for Kam Lake.
Thank you, Madam Chair. I am also wondering, given the financial situation that we have found ourselves in, if the Department of Finance intends to freeze any kind of pay for performance or bonuses associated with excluded employees during this time. Thank you.
Minister of Finance.
Thank you, Madam Chair. There have been no discussions of any kind of freeze at this time. Thank you, Madam Chair.
Thank you. Member for Kam Lake.
Thank you, Madam Chair. I would like to recognize the fact that the Minister of Finance has certainly inherited the challenge we find ourselves in currently and has not created it. That being said, it is still frustrating to start our Assembly off like this, but, at the end of the day, my concerns would be for the people of my riding and of the NWT. What I would like to be able to ask is: can the Minister clarify the ramifications if the supplementary borrowing is not approved? Thank you.
Minister of Finance.
Thank you, Madam Chair. I realize this is frustrating, but I would like to suggest to the Member that this is an opportunity for us to get it right and that, by going through this process as an Assembly right now, this is an opportunity to look at the fiscal policy that we do develop going forward and ensure that we are not back in this situation. In some ways, I'd say, this can be an opportunity for all of us.
As far as the immediate situation as to what would happen should the short-term borrowing limit not be increased, it certainly does create a situation where we are not being fiscally responsible. At present, the GNWT does have a very good credit rating. We are seen, essentially, as somewhere that is good in terms of our relationships with the banks that provide us our short-term borrowing and long-term borrowing. We would rather it not be seen as an entity that is not being fiscally responsible and that we identify that short-term cash flow problem. We are taking steps to manage that in the most fiscally responsible way.
There is also the possibility, of course, that we could be putting ourselves in contravention of our own legislation, which restricts the ability for short-term borrowing. Alternatively, we are running an overdraft in our cash, and that comes with significantly higher costs on interest, which simply makes the problem even bigger, makes the problem grow. From the perspective of the individual departments, for example MACA, to the extent that they are not receiving the funding that they are needing at the present time to maintain their operations to the end of the fiscal year, that could put internal pressures on them. Those are a number of the issues. Thank you, Madam Chair.
Thank you. Member for Kam Lake. Member for Frame Lake.
Thank you, Madam Chair. I think I'd like to start by asking, I think I heard there were some cash-flow issues with regard to federal funding for the large infrastructure projects. I had understood in the budget for 2018, or the current O and M budget, that we had already hired, I think it was, three extra staff at the Department of Infrastructure to help with better reporting and getting money out of the feds for these projects. Am I hearing that that's not working? Thanks, Madam Chair.
Minister of Finance.
Thank you, Madam Chair. I will shortly just turn it over to Mr. Kalgutkar. My ability to speak to infrastructure is quite limited. Perhaps, in the interests of time, I will just go straight to Mr. Kalgutkar.
