Debates of February 10, 2005 (day 33)

Thank you, Mr. Speaker. My questions are for the Minister of Finance, Mr. Roland, and they continue from the information we heard this afternoon on our budget. Mr. Speaker, the area that I would like to explore a little bit relates to our formula financing arrangement with the federal government. We are a billion dollar government. According to the document released this afternoon, almost three-quarters of that, or about $725 million, will come from Ottawa through the formula financing deal, Mr. Speaker.

Now, this has caused us problems in the past and, through the Department of Finance in Ottawa, there is an agreement now to renegotiate this whole arrangement. The Minister told us, in the budget address, of a panel that has been struck, Mr. Speaker, to set new terms and renegotiate this. I think that is what I would like to frame up a question on here, Mr. Speaker. Could the Minister offer us some explanation of how this new panel is going to affect the future financing in the Northwest Territories? If I could put it down to a relatively straightforward question, are we going to come out ahead with this new approach to our financing deal? Thank you, Mr. Speaker.

Thank you, Mr. Braden. Minister responsible for the Financial Management Board, the Honourable Floyd Roland.

Return To Question 357-15(3): Federal Equalization Program Review Panel

Thank you, Mr. Speaker. Mr. Speaker, the Member is correct on formula financing. We are, at this time in our life as a government, heavily dependent on transfers from Ottawa, and receive up to 75 percent in any given year of our revenues from the federal government through transfers. We are hoping to turn that around, by the way, but it has been a slow process. The work that has been done recently has been driven by the federal government. Provinces and territories have raised the issue about formula financing and how it wasn’t working and meeting the needs that the initial program was set up for.

With that, the Prime Minister and Premiers agreed to have an equalization panel established to review the equalization program and include territorial formula financing in that. We worked from the territories’ end to ensure that formula financing was dealt with somewhat separately. A couple of the members from the federal panel will be part of the subcommittee that looks at territorial formula financing. There is another member being appointed from that committee to look at the territorial side of financing.

But it is really up in the air as to what recommendations they may come back with. Their task is to review the existing equalization formula financing program and then come back with some recommendations. We expect them to come back in about 10 months’ time. How will it affect own-source revenues? How will it affect taxation or taxation efforts? We are unclear of it, but we will definitely be plugging in to ensure that our points of view are registered. Thank you.

Thank you, Mr. Roland. Supplementary, Mr. Braden.

Supplementary To Question 357-15(3): Federal Equalization Program Review Panel

Mr. Speaker, when the Minister says that we will definitely be plugging in, does that mean that we have a direct voice on this panel? Some other aspect of this was, are we sharing this with our sister territories, Yukon and Nunavut? Is everybody into the same hopper here, and experiencing the same procedure here? That is where I am going, Mr. Speaker. I am not quite certain just how involved and how close we are going to be to the process and the outcome. Thank you.

Thank you, Mr. Braden. Mr. Roland.

Further Return To Question 357-15(3): Federal Equalization Program Review Panel

Thank you, Mr. Speaker. Mr. Speaker, when the decision to go ahead on the panel was moved by the federal government, we were asked to supply names to the federal government. We put forward names, along with the Yukon and Nunavut, on the formula financing side. We haven’t had confirmation as to the names on that side, that would be plugged in. But from the other side of it, as a government, we will continue to make sure whether it is going to be to the panel as a government or sending our staff to make sure that they are very aware of how we think the formula should work and the impacts that it has had on us as a territory. As well, with the terms of reference, as they formulate it, when they get together we will be able to try to plug in there. But we continue to work with federal Finance as well as avenues of our own and how we can either make presentations or provide the necessary information to them. Thank you.

Thank you, Mr. Roland. Supplementary, Mr. Braden.

Supplementary To Question 357-15(3): Federal Equalization Program Review Panel

Mr. Speaker, we have had troubles over the last four or five years here anticipating that we were going to have revenue shortfalls given the growth in our economy and the needs of our social side, we continue to have some pretty aggressive budgets. Every year we were facing a debt wall and doom and gloom. Every year along came some kind of last-minute rescue package for us; thank goodness. But it is not a very good way to govern a place. It is not a great way to run a railroad. What I would like to know is, given the continued uncertainty, we really don’t know where our formula financing is going to go after this coming year, 2005-06. What kind of planning measures can we undertake to put together future budgets? We really seem to be in limbo here. I am wondering if the Minister can help us through our next planning stage, Mr. Speaker. Thank you.

Thank you, Mr. Braden. Mr. Roland.

Further Return To Question 357-15(3): Federal Equalization Program Review Panel

Thank you, Mr. Speaker. Mr. Speaker, part of the transition we went from our formula financing arrangements which we initially looked at extension of a year and then, as a result of the First Ministers’ meeting, got into a full-blown process that we are now entering into. That is the equalization panel and territorial formula financing. Part of that process was setting a base or a floor for transfers to the three territorial governments. That is what we have been able to build this budget on. We know, for example, that is what benefited us this year, 2004-05, where we got a little bit more cash. In 2005-06 we have based it on that amount, and we know it will be escalated by 3.5 percent. As well, if this takes longer, then we will have to work with the federal government to continue the existing process and just have the base floor continue to be escalated. We know that in the short term or the long term that is not acceptable. We have to get something permanent in place. Thank you.

Thank you, Mr. Roland. Final, short supplementary, Mr. Braden.

Supplementary To Question 357-15(3): Federal Equalization Program Review Panel

A short supplementary, Mr. Speaker. Would the Minister be able to release any of the information about the mandate, criteria or baselines that we believe are important to the outcome of this? Thank you, Mr. Speaker.

Thank you, Mr. Braden. Mr. Roland.

Further Return To Question 357-15(3): Federal Equalization Program Review Panel

Thank you, Mr. Speaker. I am aware that the federal government has formulated a draft terms of reference. They haven’t been finalized as I am aware, at least I don’t have a copy of those. We are plugged in, in a sense, through federal Finance. Once we have that and we are able, from federal Finance, to share those, I would gladly share with Members of this House. Thank you.