Yes. Thank you, Madam Chair. Lastly, we are projected to go over our debt ceiling. I recognize we're not anywhere near our five percent overall debt servicing finances of Fiscal Responsibility Policy, but I think that number is a little skewed in that we fund half of our infrastructure usually with debt, and then we switch to P3s. The full amount that we actually owe under P3s given the contractual obligations isn't really reflected as debt, and I think this is creating an incentive for us to use P3s. It seems every project over $50 million, we're going to use as a P3, which means we're going to have this debt on our books and these contractual obligations that don't actually show up here.
Is the Minister of Finance willing to revisit the financial Fiscal Responsibility Policy and given the work that's ongoing with P3 reviews and make sure that perhaps outside of this page, which is a page probably best represented for making sure we're in line with our borrowing limit, that all of that debt and that contractual obligation is factored in, in a fiscally responsible way? Are there changes to the Fiscal Responsibility Policy given our increase in use of P3s? Thank you, Madam Chair.
Thank you, Member. Minister of Finance.
Thank you, Madam Chair. The Fiscal Responsibility Policy right now is not certainly part of any of the active reviews that are under way. Certainly, the Department of Finance, in general, which is responsible for management of the borrowing plan of the Fiscal Responsibility Policy is part of what we will be getting under some review in the next coming months.
Madam Chair, I just would note that even on projects that are large projects, they would have the debt amortized over the course of time regardless. There are other public accounting techniques that would demonstrate when there's a large infrastructure project, or a large infrastructure asset that comes online. P3s are one way of paying for it. There are other projects that aren't done by P3s, but they still have to get shown over an extended period of time. P3s are not the only large project that show up over time.
I'm not sure if that's entirely answering the Member's question, but just to point out that there are different accounting standards, and different ways of demonstrating when there are, as I say, assets and items that come on line over the course of a period of time. Thank you, Madam Chair.
Thank you, Minister. Member for Thebacha.
Thank you, Madam Chair. I am going to go back to those P3s, especially the one with the Stanton Territorial Hospital. In the estimated balance, it has $130,431,000 and an estimated balance in 2022 of $127,129,000, so that could not be on the balance, Madam Chair? I am just wondering because it already goes down less than $3 million, and we know the project is almost $1 billion with the 35 years. We also know in that same P3 that we also have the legacy building next to it that we don't own anymore because we turned it over then to renovate, and that is part of the P3. When we go back to accountability and transparency, I would like complete clarity on how exactly these two projects, both the Stanton one and the Tlicho all-weather road, are accounted for.
Thank you, Member for Thebacha. Minister of Finance.
Thank you, Madam Chair. The amounts that are going down here are showing the amount of principal that is being paid down. As for the legacy building, I think that is reflected under health and social services. I do not have that information here, but if there are outstanding questions on that, I will certainly ensure that that is made available to the committee.
Thank you. Member Thebacha.
This is just on the principal, and they also have all the maintenance and all of the services that they are taking care of in that building. That is on a separate line, or is that somewhere on your -- that will be in Health and Social Services. Right? Because I was looking at trying to match this with what is in Health and Social Services, and it's very unclear.
Thank you, Member. Minister of Finance.
Thank you, Madam Chair. Yes, so this is showing only the debt that is owing and the principal on the debt that is owing. The operations budget for Stanton would come in under the Health and Social Services authority. I would expect, Madam Chair, that we likely could put a total project analysis together. Madam Chair, actually, Deputy Minister Kalgutkar was actually quite involved on the Stanton project. Perhaps, I would suggest, he could also give a bit more clarity to MLA Martselos.
Thank you, Minister of Finance. Deputy Minister Kalgutkar.
Thank you, Madam Chair. I will just use Stanton as an example. When Stanton went into procurement and then went into construction, just like every other project, the full value of Stanton shows up in our capital estimates, and the Assembly votes on the annual amounts related to that project. What is showing up on the borrowing plan is just the private sector's long-term debt that they have incurred to help finance that project. When Stanton went into operations, then the O and M part of that, there is a service payment that is on the department of health's annual main estimates. That payment includes several components. It includes the debt servicing component. It includes also the annual O and M and deferred maintenance that we pay BHP for that project, so the O and M side is shown in the department of health's operating budget that the Members will see later this session. All this is showing is the P3 debt that is on our books. Thank you, Madam Chair.
Thank you, deputy minister. Member for Thebacha.
I want to go down now to the NWT Hydro Corporation. There is $105,084,000. What does that include in that $105,084,000 of borrowing? What is that? What does it include?
Thank you, Member. Minister of Finance.
Thank you, Madam Chair. I do not have the detail here, but I anticipate Deputy Minister Kalgutkar might be able to provide a bit of background on that.
Thank you. Deputy minister.
Thank you, Madam Chair. The $105,000,000 is actually made up of several projects. It's the capital plan that the Power Corporation wants to undertake in 2021-2022. The major project, if I recall, that is in that plan is the purchase of the Hay River franchise. There is, through a couple of long LNG projects, one in Fort Simpson and one in Lutselk'e, that are on that plan, and also, I believe there is a Taltson refurbishment project that is on that plan. Those are the four major ones. The rest of it is made up of several small projects. Thank you, Madam Chair.
Thank you, deputy minister. Member for Thebacha.
One of the items on there is the purchase of the franchise for Hay River so that it goes back into NTPC. Right? It comes under the auspices of NTPC. Is it precedent that we are paying for a $16-million purchase for a municipality? I mean, I am just wondering if we are starting to set a precedent here. You are doing this. Northlands Utilities is partly owned by all the Aboriginal groups of the Northwest Territories, and the only reason why they are doing this is because they say the cost of power is going to be less. We all know that is not going to happen. Then Hay River is buying it, and you guys are buying this. Then the other part of the factor is, and I know this for a fact because I used to sit on this board, that all the legal fees were paid by the Government of the Northwest Territories to fight these Aboriginal groups, all the Aboriginal groups in the Northwest Territories, in court, and all those legal fees were paid by the Government of the Northwest Territories. Am I right?
Thank you, Member. Minister of Finance.
Thank you, Madam Chair. I am not as versed in the operations of the Northwest Territories Power Corporation, obviously, not being the Minister responsible, but certainly, I wouldn't say that there is any particular precedent per se at this point. Although, again, I am hesitant to speak on behalf of the Minister responsible for NTPC. The legal costs, there certainly have been legal costs borne by the Northwest Territories Power Corporation at this point, so they are the ones who have paid their own legal fees. Thanks, Madam Chair.
Thank you, Minister. Member for Thebacha.
What I am getting at is that we are always saying that we are going to support Aboriginal and northern business, and here we are once again. This is a Crown corporation under the auspices of the Government of the Northwest Territories, and we are paying $16 million for the assets of Northland Utilities in Hay River. I find that is, for clarity, not our mandate, and we are setting a precedent. The next time, over here, when the Yellowknives want to get out of it, we are going to start that here, too, with Northland Utilities? I know they just signed a five-year deal because I keep track of everything that comes through here. When its time is up, you are going to pay how much there for that asset. You are going to go more in the hole, and you are still not going to pay lower power rates. I don't know how you think, physically, but that is not a way business will be run. No business, private business, will run like that. Just because it's government, you can go around and do these, make these crazy transactions, and it's okay. That is not transparency. That is not clarity. That is not accountability. Thank you.
Thank you, Member for Thebacha. Did the Minister want to respond?
Sorry, Madam Chair. It's simply to say that, obviously, this is really a matter that should go to the Northwest Territories Power Corporation, to the Minister responsible for the Power Corporation to speak to, whether or not there is anything to be taken from the approach here, whether there is any change in future approaches. However, with respect to the borrowing plan here, as I say, it's really just reflecting the projects, including the Hay River project but not exclusive to the Hay River project, and showing the impacts that that has on the total borrowing plan of the government. I am not really best placed and am hesitant to speak for my colleague. No doubt my colleague is listening, Madam Chair, and hopefully more thorough responses can be provided to the MLA in due course. Thank you.
Thank you, Minister. Member for Frame Lake.
Thanks, Madam Chair. Yes. I, too, am concerned about the NTPC bond issuance. This is new debt. I know that we ran into a problem last year where bonds were issued for new debt and Regular MLAs didn't really feel that we had been properly informed that it was going to be through a bond issuance, so I appreciate the increased transparency with the borrowing plan this year. How is a member of the public supposed to understand what this bond issuance is really for the NTPC? Is there a publicly available list of what these assets or what this capital stuff is supposed to be? Thanks, Madam Chair.
Thank you, Member. Minister.
Thank you, Madam Chair. I anticipate we certainly could get some further information. It really is reflective of the capital plan of the NTPC so, to the extent that that capital plan is being approved and has been approved and is available publicly, then that would demonstrate what projects are under way and planned for the Northwest Territories Power Corporation. By utilizing the GNWT to support the issuance of bonds and their borrowing, they are saving I believe upwards of several million dollars because of the ability of the Government of the Northwest Territories to have a better rate, so that is the benefit of doing a bond issuance. Thank you, Madam Chair.
Thank you, Minister. Member for Frame Lake.
Thanks, Madam Chair. Is there a long-term capital plan for the NTPC or an asset management plan or something? Last year, they got $40 million in repayable bonds. This year, it's $105 million. It's jumping around. Is there a long-term capital plan, and if so, can the Minister provide that to us as Regular MLAs? Thanks, Madam Chair.
Thank you, Member. Minister.
Thank you, Madam Chair. Yes, absolutely there is, and we'll certainly provide that.
Thank you, Minister. Member.
Thanks, Madam Chair. I appreciate that commitment, and it would be great if that kind of information could be made available to the public, as well. The loan guarantees line toward the bottom of this page, can someone explain what that is about? Thanks, Madam Chair.
Thank you, Member. Minister of Finance.
Thank you, Madam Chair. I'm pretty sure I asked the exact same question, and I asked it to the deputy minister. If I could perhaps impose on him to answer the Member, please.
Thank you, Minister. Deputy Minister.
Thank you, Madam Chair. The previous practice was for NTPC to undertake their own borrowing for their capital plan, and the Government of the Northwest Territories would guarantee that debt. Because it was proved to be more beneficial for the government to issue borrowing on behalf of NTPC, because we are allowed to then pass those savings on to the rate base, we started undertaking that borrowing on their behalf, starting, as Members know, last year. That's really the old borrowing based on previous practice. Thank you, Madam Chair.
Thank you, deputy minister. Member for Frame Lake.
Thanks, Madam Chair, and thanks for the response. I, too, want to speak to the Fiscal Responsibility Policy. I'm not sure that it really captures what happens with P3s in an adequate way because, as I am starting to understand a bit better, a lot of the P3 expenses and really long-term debt are being sort of taken out of the long-term borrowing plan and put in as operational expenses through the annual payments we have to make for the operation of the facility that are going to go on for 33 or 35 years, or whatever is left in the contract. I'm not trying to ascribe motives or blame or anything, but it just seems to be a way of changing long-term debt into ongoing operational expenses, which eats into our ability to spend money as part of our O and M budget. How does the Fiscal Responsibility Policy really account for P3s, and is it time that we really looked at the Fiscal Responsibility Policy to make sure that it includes this diminished capacity to spend money on O and M? Thanks, Madam Chair.
Thank you, Member. Minister.
Thank you, Madam Chair. The Fiscal Responsibility Policy really doesn't speak to operations and maintenance budgets of any of the infrastructure projects that are at issue. It speaks to the funding of the infrastructure project itself, so it wouldn't be reflected in the operation of the asset, whether that is a P3 asset or otherwise. Obviously, it seems that perhaps there needs to be a further briefing or discussion around the Fiscal Responsibility Policy and what it includes, but the fact that it doesn't include the operations of an asset that happens to be a P3 is not, I would suggest, the area of issue or the area of concern to be focused on because that is not its intention. Thank you, Madam Chair.
Thank you, Minister. Member for Frame Lake.
Thanks, Madam Chair. Like my colleague from Yellowknife North, I believe that the potential for P3s is starting to create an incentive to do large infrastructure projects in that way so that we take some of the long-term debt off the books, so to speak, and put it into long-term contracts that affect our capacity for O and M spending. I do think it's starting to create an incentive do to that, and I'm not sure, with all of the criticism that there has been in the past in other jurisdictions about P3s, that that's a great way to proceed.
I do think I want to take the Minister up on that opportunity to have a briefing on the Fiscal Responsibility Policy and look at it more closely, but I want to go to the total consolidated borrowing. It looks like it's $1.59 billion at the end of this upcoming year, and that is getting, to me, pretty close to the debt limit of $1.8 billion. We're going to exceed that in a future year if we stay on this track. I guess I'm worried about what would happen if we had unforeseen circumstances around forest fires or something. We're going to exceed this long-term borrowing debt perhaps as early as this year or maybe next year if there were some unforeseen circumstances. Do we actually have a longer-term plan to not exceed the debt limit, and if so, what is it? Thanks, Madam Chair.
Thank you, Member. Minister of Finance.
Thank you, Madam Chair. No, we're not projecting to hit the borrowing limit this year or next year, and the reality is that there is a lot of projections in here that continue to be fairly conservative, not the least of which is the revenue projections. For example, the performance of our corporate sector or our industry sector, whether it's royalties or whether it's corporate taxes, we do tend to take a fairly conservative approach in terms of the projections. I am not concerned about hitting the borrowing limit here. The other side is, of course, there are contingencies built in both to the borrowing limit and contingencies built into, if I'm not mistaken, the Department of ENR, for example, around better ways to protect the ability to protect forest fires and other potential natural disasters. No one could have expected COVID-19, for instance, and that certainly has had an impact, and yet, especially with support from the federal government, the overall spending on COVID-19 has been one that has been manageable. It's my expectation that that approach will continue, that the contingencies built in and the approach built into making estimates and projections is conservative enough that we will not be hitting that borrowing limit this year or next. Thank you, Madam Chair.
Thank you, Minister. Member for Frame Lake.
