Thank you, Mr. Speaker. Mr. Speaker, last February, I introduced a fiscal strategy that took the necessary steps to ensure the ongoing fiscal sustainability of our government. This meant taking strong action to reduce spending while still making the necessary investments to help us achieve the goals and objectives set out in our strategic plan.

The cornerstone of our fiscal strategy was the introduction of the fiscal responsibility policy. Simply stated, the policy requires us to continually monitor expenditures to ensure we achieve the necessary cash surpluses from operations to finance 50 percent of our annual capital investment.

Our ability to fully adopt the policy is conditional on the federal government amending an existing federal Order-in-Council, which currently sets out an arbitrary debt limit on our government of $300 million. The amendment we seek is to base the limit on reasonable measures of what we can afford. The affordability measures we propose are contained in our fiscal responsibility policy. I will be pursuing negotiations on this important matter with the federal Minister of Finance, the Honourable Ralph Goodale.

Mr. Speaker, in the short term, we have been successful in maintaining sufficient operating surpluses to stay within the guidelines of the fiscal responsibility policy. However, our supplementary requirements have exceeded our forecasts and resulted in a reduction of our projected operating surplus from $49 million to $26 million. Although these supplementary appropriations are for important and urgent needs, we are cognizant that we must exercise care that we do not introduce a level of spending we cannot afford to maintain. We must always closely match our additional spending with increases to our revenues so that our bottom line results stay affordable. As I flagged in my budget address earlier this year, the government must also ensure that it has the cash that will be required to repay a large corporate tax overpayment that we received a few years ago. Next year, the repayment amount will be close to $300 million.

Mr. Speaker, as I stated in the February budget address, the formula funding arrangements after 2005-06 are uncertain. In future years, our financial agreement with the federal government will be heavily influenced by the recommendations of the Expert Panel on Equalization and Territorial Formula Financing. Over the summer, we have made strong arguments and presentations to the expert panel to ensure our unique needs and issues are understood. It is anticipated that the expert panel will be ready to report to the federal Finance Minister by the end of December 2005. We anticipate that the federal government will then go through a process to review and discuss the recommendations before final decisions are made.

We are hopeful that the Territories’ realities and needs will be well reflected in the expert panel report and that the federal government will act appropriately. However, the uncertainty about the outcome of this review forces us to be conservative in our fiscal outlook beyond 2005-06.

In September, the Premier and I met with another panel, the Council of the Federation Advisory Panel on Fiscal Imbalance. Provincial and territorial Premiers established this panel to investigate and make recommendations on the fiscal imbalance between the federal, provincial and territorial governments. The panel was able to visit the community of Behchoko while they were here, and from the many presentations, conversations and discussions they had, got a good sense of the challenges we face here in the North. This panel is expected to report in March 2006, perhaps in time to influence the federal government’s consideration of the expert panel report.

Mr. Speaker, our government welcomed the federal government’s commitment to provide $500 million over 10 years for the social and economic impacts of the Mackenzie gas pipeline. However, this funding only flows if there is a pipeline and it only flows to communities directly affected along the route of the pipeline. These funds do not address the impacts of mining and other resource developments and are not specifically for GNWT impact requirements. Although we intend to work closely with aboriginal governments in the management of these funds, the GNWT role will be more of an advisory nature.

It is important to point out that a one-time fund, no matter how large, does not provide a long-term source of sustainable revenue upon which firm planning and decisions can be made by either the GNWT or aboriginal governments. The importance of successful negotiating with the federal government a fair net fiscal benefit from resource revenue sharing must be recognized. Although we welcome and support responsible resource development and all the economic benefits it can bring, our territory is, and will continue to be, impacted by resource development. Our government’s social and infrastructure expenditures are being impacted by resource development, yet the royalties and other resources royalties from this development are flowing to the federal government. In 2004-05, the federal public accounts revealed that Indian and Northern Affairs Canada took in over $270 million of resource royalties, including those from the Norman Wells field. This must be addressed soon. Negotiations on resource revenue sharing have been stalled for a number of months as the federal government waits for the recommendations from the Expert Panel on Equalization and Territorial Formula Financing. We must get these negotiations back on track as soon as possible. The Premier and I are working diligently towards this end.

In summary, our short-term fiscal situation remains sound, but we face many trials and uncertainties in the future. We will do our best to turn these into opportunities. Thank you, Mr. Speaker.

---Applause