Thank you, Madam Chair. I always have questions. The Department of Infrastructure under this section administers the Leasing of Improved Real Property, essentially the policy that controls how we lease all our property. This policy is from 1998, and I think it's a little outdated in regard to the work we are doing on procurement review. Is there any intention and a timeline to update the Leasing of Improved Real Property Policy? Thank you.
Thank you, Member. Minister.
Thank you, Madam Chair. I am going to turn this over to Deputy Minister Loutitt.
Thank you. Deputy Minister Loutitt.
Thank you, Madam Chair. At this time, we are looking at bringing forward some ideas as far as what we are looking at for amendments to the policy, but at this time, we do not have a time frame. Thank you, Madam Chair.
Thank you, Deputy Minister. Member for Yellowknife North.
Thank you, Madam Chair. The Housing Corporation previously conducted some analysis of whether it was cheaper to build public housing or to lease it, and they determined, ultimately, in the long run, it was cheaper for them to build and own their infrastructure. I note that our lease policy requires us to undertake a lease-versus-own analysis of all of the GNWT properties to see whether it's cheaper. In general, does the department have a sense of whether it's cheaper for us to own or lease our buildings? I note we built some very large office towers, such as the new government building, before, so was that the determination there, that it was cheaper for us to own it than it was to lease it? Thank you, Madam Chair.
Thank you, Member. Minister.
Thank you, Madam Chair. It would depend on what type of asset we are looking at. If we are looking at big asset structures that require, sometimes, a P3, that would depend on the type of building we are looking at. Sometimes, there are opportunities in cost savings to be able to have a look at how we lease out buildings, whether it be more affordable for us to just lease versus purchase. It would all depend on what it is that is slated in our capital assets. Thank you, Madam Chair.
Thank you, Minister. Member for Yellowknife North.
Thank you, Madam Chair. Where I am going with this is that the GNWT is the anchor tenant in most of Northview's building. It's in downtown Yellowknife. My understanding is that we built a new government building because we understood it was cheaper for us to own our buildings as opposed to leasing them from large southern REITs. My question is specific to class A commercial office spaces. Is it cheaper for us to own it than it is to lease it right now at market rates in Yellowknife? Thank you, Madam Chair.
Thank you, Member. Minister.
Thank you, Madam Chair. Again, I am sorry to be just a broken record, but I do want to say that we look at these assets and how we acquire and how we dispose and how we do a lot of things on a case-by-case basis. You look at whether it makes sense for the government to lease versus build or purchase. It would all depend on assets, on the locations, some clients and timelines, on how we determine purchasing or leasing. Thank you, Madam Chair.
Thank you. Member for Yellowknife North.
Thank you, Madam Chair. The current policy allows us to lease buildings off northern-owned landlords if we think we can pay an extra 10 percent on the cost of leasing. I think that is fair, and I don't mind paying a little bit more on leases of northern-owned buildings. I would note that I do not believe that the money we are paying the southern REITs, which is millions and millions of dollars, is actually cheaper than owning the buildings or cheaper than renting off a northern landlord. I question whether we are even in compliance with our leasing of improved real property policy. Can the Minister review our current leases and assess whether they are actually within the 10 percent as required by the policy? Thank you, Madam Chair.
Thank you, Member. Minister.
Thank you, Madam Chair. I am not quite familiar with the number of leases that we have. Perhaps it's quite a bit, given that the Department of Infrastructure is responsible for predominantly a lot of the leases for all the other government departments. I am going to give the assistant deputy minister a few minutes to pull that number, so if I can, to the assistant deputy minister.
Thank you. Mr. Brennan.
Thank you, Madam Chair. Yes. In terms of Yellowknife, the first comment is that a lot of these leases, a lot of these buildings, were once owned by northern companies that have since sold off to southern REITs. A lot of these times, these are long-term leases, 20-year leases, so I do not think we have the numbers in front of us to determine what we entered into with the northern vendor versus the southern vendor at the time. I think that we could take a look at how much it is costing us. As you said, we are paying a lot of money in Yellowknife to these northern vendors. Of course, some of the challenges with owning is the up-front cost the government would have to incur to get into the business of owning those buildings, so that is certainly a potential hamper to us moving into ownership, as well. Thank you, Madam Chair.
Thank you. Member for Yellowknife North.
Yes. Thank you, Madam Chair. I will leave this for another time, but it's my view that being the anchor tenant in a bunch of southern REITs' buildings makes absolutely no sense. It does not align with supporting northern businesses, and if we are actually paying above what it would cost for us, we are spending extra money instead of owning the infrastructure. Either we should build it as a government or find actual northern landlords to give that money to, would be my preference. I will leave that as a comment, and I thank the department for their comments on that.
In the area of asset management, my understanding is that the Auditor General is working to create new public accounting standards and that, as part of this work, we will have to carry a liability on our books of what it would cost to essentially not just remediate our assets but to put them in landfills. I believe that work is coming on next year, when the public accounting standards are going to require us to carry a number in our books of what every single building costs to put into a landfill properly, which is a very, very large number, especially the cost in smaller remote communities. I believe we already carry a bit of a liability in regard to asbestos and hazardous materials but not a liability in regard to actually putting those buildings in landfills and the costs. I recognize that policy has not come into place yet, but I am wondering if asset management is involved in that work or if we have in the environment department here any sort of estimate of what that cost is or how they are involved with that. Thank you, Madam Chair.
Thank you. Minister.
Thank you, Madam Chair. I am going to get ADM Brennan to answer that.
Thank you. Mr. Brennan.
Yes. Thank you, Madam Chair. Yes. The Member is correct. Effective April 1, 2022, the Government of the Northwest Territories will have to recognize obligation or liability for all of its assets, not just buildings, but any other asset in case we have a legal requirement to remediate or return it to dump, I think was the terminology that was used. We are working on that right now for all of our buildings. Asset management is involved in coming up with an estimated cost to provide, to remediate all of our buildings to the legislative requirements. That work is ongoing, is being led by the Department of Finance as it applies to all departments and all assets. Of course, the Department of Infrastructure, with the number of assets that it owns, is the largest user of that. Thank you, Madam Chair.
Thank you. Member for Yellowknife North.
Yes. Thank you, Madam Chair. I will ask a follow-up question to Finance sometime about what that number is actually looking like and how big of a liability it is to be added to our books. Can I just get clarification of whether asset management is where I would find the deferred maintenance budget, and if so, how much deferred maintenance is in the operations budget? Thank you, Madam Chair.
Thank you. Minister, do you know?
What I can say is: when we were doing some of our capital work, we were looking. One of the Members sitting across from me had asked the question on deferred maintenance and what it would cost in terms of getting some of our assets up to a normal standard, and it was to the tune of $462 million to get some of our deferred assets up to par. If I can ask ADM Brennan if he wants to add anything further to that in terms of what is in the budget right now? Thank you, Madam Chair.
Thank you, Minister. Mr. Brennan.
Thank you, Madam Chair. Yes. There are two components for maintenance. Some of the information is in the capital estimates, and there is about $3 million annually in the operations budget. Thank you, Madam Chair.
Thank you. Member, you ran out of time. Member for Great Slave.
Thank you, Madam Chair. Just to follow up a little further on what my colleague from Yellowknife North was saying, can you speak to: what does that mean, then, with respect to this new Auditor General liability? It's going to take some time, obviously, for the Northwest Territories to work on some of that liability. My question is: as regulations increase, they always seem to get stricter with time; what sort of financial impact does that have on us with that liability number we are now going to have to estimate? Do we anticipate it will just continue to increase as regulations get more stringent? Does that then force us to want to remediate some of our sites ahead of time and be more proactive? Thank you, Madam Chair.
Minister.
Thank you, Madam Chair. I will get ADM Brennan to answer that.
Thank you, Minister. Mr. Brennan.
Yes. Thank you, Madam Chair. I think the simple answer is yes. We would expect that it would increase over time as we add more assets to the system. The exercise we are undertaking right now is to look at our existing assets and looking at our existing regulations and then to try to come up with an engineering estimate to determine how much cost it would take currently to remediate. Given things usually cost more money in the future than they do today, I would expect that it would increase on an annual basis, if we are doing our jobs correctly and coming up with that number. Thank you, Madam Chair.
Thank you. Member for Great Slave.
Thank you, Madam Chair. Then I would anticipate that the Minister will then be directing her department to look and deal with more risk or higher risk-level assets ahead of lower risk ones and that some sort of prioritization like that, like a lens like that, will be put on this analysis? Thank you, Madam Chair.
Thank you, Member. Minister.
Thank you, Madam Chair. We currently have what we call a dashboard. It kind of looks at all of our different assets, and we have a red, which basically means that these assets, we need to get them started. Then we have a yellow, and then we have a green. We have different colour coding on our dashboard to be able to look at all of the different assets that are required through the Northwest Territories in terms of our capital assets, so we do have a dashboard to be able to help us to determine what are priority assets and such. Thank you, Madam Chair.
Thank you, Minister. Member for Great Slave.
Thank you, Madam Chair. I'm really glad to hear that. It's going to be quite an undertaking for the department. I'm not sad I'll be missing it. I think the next question I have is around the Preventative Maintenance Program. Given that we have assets that have become worse over time, I'd like to talk about where the money falls within this department or this line item or these line items for the Preventative Maintenance Program so we can keep our assets in better shape. Thank you, Madam Chair.
Thank you, Member. Minister.
Thank you, Madam Chair. I am going to hand it to ADM Brennan. Thank you.
Thank you. Mr. Brennan.
Thank you, Madam Chair. I think there are a couple of different places where we have money in our budget currently. Under asset management, as previously mentioned, there is $3 million for the Deferred Maintenance Program, but also, there is money in regional operations, as well, that each region has to do minor fixes to help upkeep of all the GNWT assets in the system. Thank you, Madam Chair.
Thank you, Mr. Brennan. Member for Great Slave.
Thank you, Madam Chair. I would just like the Minister to maybe speak a bit on optimization of these types of programs. Is the department looking at policy and procedural implementation, such as, for example, drivers' logs, inspection records, safety programs like that that actually have been shown to reduce maintenance costs, et cetera? Thank you, Madam Chair.
Thank you. Minister.
