Mr. Speaker, later this session I will be presenting Bill 1, An Act to Amend the Borrowing Authorization Act. The purpose of this act is to increase the short-term authority to borrow provided in section 1(2) of the act from $175 million to $275 million.
This should not be confused with the federally set borrowing limit of $575 million. The Government of the Northwest Territories continues to discuss an increase to that limit with the federal Finance Minister so we will have more flexibility to invest in the long term. We have recently received a letter from Minister Flaherty assuring us that the federal government recognizes the importance of a timely resolution to the borrowing limit issue so that we can move forward with our fiscal planning and infrastructure investments.
However, we also have to do a little housekeeping of our own with respect to our short-term borrowing authority. The Borrowing Authorization Act gives the GNWT the authority to borrow up to $175 million over the short term. This allows the GNWT to manage its cash. This limit has remained the same for over 17 years while government operations and revenues have increased. As a result, the GNWT’s flexibility to properly manage cash resources has eroded over time. Increasing the limit will make it easier to manage cash, especially if new infrastructure programs are announced by the federal government in the next three or four years. The GNWT will need to ensure that any borrowing under the Borrowing Authorization Act will still fit within the overall limit
provide by the federal government under the Northwest Territories Act (Canada).
There is some urgency to the proposed increase because we need to make a $65 million corporate income repayment on March 31st that relates to an overpayment of corporate income tax from the 2007 tax year. In a sense, the $65 million represents an interest-free loan from Canada that has come due and as a result will cause the GNWT to exceed its current short-term borrowing limit when the repayment is made on March 31st. The following day, April 1st, the GNWT will once again be within the current limit when it receives the first Territorial Formula Financing payment for 2012-13. This brief moment of being over the current limit is why we will be proposing introduction and passage of the amendment during the February 2012 sitting of the Legislative Assembly.
Although this proposal increases the short-term borrowing limit, the GNWT will, under its current fiscal strategy, start to recoup cash resources over the next few years and actual short-term borrowing requirements will therefore start to decrease. The increase will restore flexibility in our cash management and will not affect the GNWT’s credit rating or factor into the discussions we are having with the federal government on the federally imposed borrowing limit. Thank you.
Thank you, Mr. Miltenberger. The honourable Minister of Energy Mines and Resources.
