Mr. Kalgutkar.
Thank you, Madam Chair. The Member is right. As part of the overall federal funding, there is an allocation as part of that funding to provide the Department of Infrastructure internal resources, new internal resources, to help manage all the various pots of money that are coming to the government. The challenge that we are having with this cash flow is there have been some delays in the claims that we are submitting back to the federal government, and that is what the Department of Finance is working with Infrastructure on to make sure that these claims to the dollars that we are spending are provided by the federal government on a timely basis. Thank you, Madam Chair.
Thank you. Member for Frame Lake.
Thanks, Madam Chair. I think I heard the Minister say that their department was going to look at ways to try to prevent this from happening again. Can the Minister get a little bit more specific about what specific measures the Department of Finance is going to do to make sure that our predictions are better in the future, that we have a better way of collecting money owed to us? Thanks, Madam Chair.
Minister of Finance.
Thank you, Madam Chair. Two parts: firstly is that, in the process of seeking main estimates from the various departments, individual departments certainly need to be given perhaps more scrutiny, more pressure, to ensure that those estimates are accurate. It will be somewhat challenged in the next budget cycle. Departments have already been providing those estimates before this administration even took their seats, but we will do our best over the next coming months to know that that is an expectation.
Internally, the Department of Finance, when this issue arose and our own conversations were had, decided that we would be re-profiling an internal position to be focused on cash flow and receivables to ensure that we are doing every step that we can at the Department of Finance to oversee the day-to-day cash-flow activities of the Government of the Northwest Territories. Thank you.
Thank you. Member for Frame Lake.
Thanks, Madam Chair, and I want to thank the Minister for that response. I guess I have a few comments I want to offer. I want to echo some of the frustration of my colleagues here this evening. Not a lot of this is actually new. The request, though, certainly for a $135-million increase in short-term borrowing is something new, and it comes at a difficult time, at the beginning of this Assembly. I have asked questions in the last Assembly about the deficit for the Northwest Territories Health and Social Services authority. If you look at their annual report, the latest one that is available, the deficit is $117 million if you look at note 6. That is what is driving part of this. This is a result of chronic underfunding by our government, of the Health and Social Services authority, across all of the departments or all of the regions. This is an accumulated deficit over time, chronic underfunding to health and social services. That is partly to blame here, in my opinion, Madam Chair.
Infrastructure spending, we took on way too many large infrastructure projects in the last Assembly. That is what is driving our budget now, the federal money, the 75-cent dollars, and we are going to get caught in the same trap again. We are going to see these cash-flow problems only increase in this Assembly. That is a little bit of a warning, a heads-up. It is a major concern for me with large infrastructure projects.
I had also heard the Minister say that the corporate taxes were not as predicted and that, at the end of this year, they are going to be in a negative position with regard to corporate taxes. Corporate taxes are a terrible way to try to capture revenues from non-renewable resource development, and I have been on record saying that for decades, as a resident, to previous finance Ministers. If we want to actually capture non-renewable resource development benefits and money back to this government, we need a resource tax or an increase to the royalties. Corporate taxation just doesn't do it, and it goes up and down like a yo-yo, and that is partly why we are in this problem in the first place, now.
I am surprised to hear at this point that we are actually going to be staffing a position to help us with cash flow. I would have thought that that is just a basic thing that any Department of Finance would actually already have in place so that we could avoid this kind of problem in the first place. If you don't have somebody who is watching the cash flow and making sure the money comes in on time, we are in a desperate situation here. I am glad to hear that that is going to get addressed. I don't blame this Minister; she is brand new. However, there are some serious problems here with the way that we have been running our finances for many years, and this is coming to light. This highlights a lot of these issues. These issues are going to come back in the next budget, so I am willing to let this one go, but these are systemic problems that we have to address in the next budget. We have to find more money coming in here, more prediction and reliability with that money coming into the Northwest Territories. We have to make better efforts to collect debts and get them on time. We have to stop the chronic underfunding of our healthcare system. These are things that are going to crunch us in terms of our ability to take on new initiatives, as well.
Sorry, that is a mouthful from me, but I am very frustrated with this, as I think most of the Members on this side of the House are, and many of these issues should have been addressed by the last Assembly. I tried to do some of that, but now we are here again. The very first thing we've got to do is approve a short-term borrowing limit increase by $135 million; this is not a good place to start off. Thanks, Madam Chair.
Thank you, Member for Frame Lake. Do you want to make any comments, Minister of Finance?
Thank you, Madam Chair. The Member indicated that the frustration is on the one side of the Assembly. I suspect it is on all sides of the Assembly. I certainly share the frustrations sitting here, as well. What I would like to say on behalf of the Department of Finance is that we intend to start now as we mean to go on and to be fiscally responsible but to, as I have said, use this as an opportunity to do better. That is where, we mentioned earlier in my very brief introductory comment, that, by doing some four-year plans, year-over-year plans, it is our hope that each department is in a better position to make better estimates so that the total budget matches up in a way that allows for better projections of cash flow so that we can plan, knowing that there will be supplementary appropriates, but that they are not perhaps of the nature that we're dealing with today.
That said, we are going to do our best to be fiscally responsible right now to manage the monies in a way that ensures the best possible flexibility, while still not incurring the necessary expenses such as interest. I do thank the Member for his detailed comments. Thank you, Madam Chair.
Thank you. Member for Yellowknife North.
Thank you, Madam Chair. Can the Minister of Finance tell us what the interest we will pay on this $135-million supplemental is?
Minister of Finance.
Thank you, Madam Chair. In the short-term instruments, it would be 1.97 percent.
Member for Yellowknife North.
Thank you, Madam Chair. Minister of Finance, I'm going to ask you to do some math on the fly, but, paying 1.97 percent, perhaps you could give me an estimate of what the debt management cost is on our $525-million figure. Thank you, Madam Chair.
Minister of Finance.
In the interest of time, Madam Chair, I'll just turn it over to Mr. Koe.
Mr. Koe.
Thank you, Madam Chair. It's a hard estimate to do quickly. It would be dependent on how much of this increase we're actually going to use, when we're going to use it, how we borrow it. What I can say from our current projections, right now, we're using banking overdraft, which is a much higher percentage. I do believe it's around prime plus one, so that's about 4.95 percent right now. Depending if we're using bank overdraft to our short-term rate, which is 1.97, I do believe, at the end of the day, even if we do this increase, if we use the instruments available to us at a lower cost, it would more than offset it and be about the same at the end of the year. Thank you, Madam Chair.
Thank you. Member for Yellowknife North.
Thank you, Madam Chair. Looking at this, our short-term borrowing limit is $525 million. Our long-term debt appears to be $419. We've now surpasses short-term over long-term. I really get a sense that this is a bit of a shell game in that we're moving money around, and I don't think that this is correctly characterized as short-term debt. Much of this, I am quite confident, is in fact long-term debt. Perhaps the Minister of Finance can tell me, I recognize this is getting largely into the budget, but what the expectation is for converting this short-term debt to long-term debt. Thank you, Madam Chair.
Minister of Finance.
Thank you, Madam Chair. Again, I share the Member's frustration of just seeing large numbers. Wanting the government to be fiscally responsible is a message that I am hearing loud and clear, and wanting to be fiscally responsible in a way that is responsive to the needs of the government long-term. Again, I'm hearing that loud and clear.
There is no intention to directly convert. The balance between short-term debt, long-term debt, and a budget is precisely the task that we are faced with in order to create the budget for 2020-2021. This particular supplementary appropriation bill is essentially a patch on a situation created by the 2019-2020 budget and our best effort to remain as fiscally responsible at this moment, under that passed budget, until the end of this fiscal year. Thank you, Madam Chair.
All right. Member for Tu Nedhe-Wiilideh.
Mahsi, Madam Chair. I'm just listening to the Minister's comments and Mr. Koe's comments for this being a financial patch, and the lending rate of prime plus one. From what I'm hearing, of this $135 million, we're not entirely sure how much is going to be used or if it's all going to be used for this fiscal cycle.
Minister of Finance.
Madam Chair, that's correct. The number that we settled on in terms of coming forward to the Assembly is one that we thought was certainly as low as possible, but while retaining sufficient flexibility, looking at the projected cash flows from now to the end of just this fiscal year, again.
Thank you. Member for Tu Nedhe-Wiilideh.
No further questions, Madam Chair.
Are there any further comments? No? All right. If there are no further comments, does the committee agree to proceed to the details contained in the tabled document?
Agreed.
2019-2020 Supplementary Estimates (Operations Expenditure) No. 3, Department of Finance, short-term borrowing, Office of the Comptroller General, not previously authorized, $135 million. Does the committee agree?
Agreed.
Thank you, committee. Do you agree that you have concluded consideration of Tabled Document 5-19(1), Supplementary Estimates (Operations Expenditures and Borrowing Authorization) No. 3, 2019-2020?
Agreed.
Thank you, Minister, and thank you to the witnesses for appearing before us. Sergeant-at-Arms, please excuse the witnesses from the Chamber. Does the committee agree that this concludes consideration of Tabled Document 5-19(1)?
Agreed.
Member for Tu Nedhe-Wiilideh.
Mahsi cho, Madam Chair. I move that consideration of Tabled Document 5-19(1), Supplementary Estimates (Operations Expenditures and Borrowing Authorization) No. 3, 2019-2020, be now concluded and that Tabled Document 5-19(1) be reported and recommended as ready for further consideration in formal session through the form of an appropriation bill. Mahsi cho, Madam Chair.
The motion is in order. To the motion.
Question.
Question has been called. All those in favour? All those opposed? The motion is carried.
---Carried
Tabled Document 5-19 will be reported as ready for consideration in formal session through the form of an appropriation bill. What is the will of committee? Mr. Norn.
Sorry, Madam Chair; report progress.
Thank you. I will rise and report progress. Anybody opposed to rising and reporting progress? No, okay. ...
Thank you, Mr. Speaker. Your committee has been considering Bill 1, An Act to Amend the Legislative Assembly and Executive Council Act, and Tabled Document 5-19(1), Supplementary Estimates (Operations Expenditures and Borrowing Authorization) No. 3, 2019-2020, and would like to report that Bill 1 is ready for third reading, and that consideration of Tabled Document 5-19(1) is concluded, and that the House concur in those estimates, and that an appropriation bill to be based thereon be introduced without delay, and Mr. Speaker, I move that the report of the Committee of the Whole be concurred with.
Thank you, Member. Do we have a seconder? Member for Hay River South. The motion is in order. To the motion.
Question.
