Thank you, Mr. Speaker. My questions today are addressed to the Minister of Lands. I’d like to follow up on his statement about establishment of the liabilities and financial assurances division.
Some questions have been asked already by other Members about security for development in the NWT. I’d like to ask the Minister first, in general, does the department have an approach, do they have a policy in regard to the value of security that is required for development? Is the security required equal to the value of the remediation or is it a percentage of the value of remediation? Thank you.
Thank you, Ms. Bisaro. Minister of Lands, Mr. McLeod.
Thank you, Mr. Speaker. My understanding is that the security amounts are set by the board and that it would normally consist of whatever it may cost to remediate the site. I’d have to confirm that, but I know the amounts are set by the boards. Thank you.
Thanks to the Minister. The Minister’s statement stated: “Security provides additional protection to ensure that there are funds to address environmental liabilities if proponents fail to take remedial action.” That’s definitely a statement that I can agree with and I’m very glad that that’s in there. I do have a bit of a difficulty in that if the amount is set by the board and yet the government is supposed to do the monitoring and enforcement, if the number is not enough for remediation, there’s a bit of a gap in there.
I’d like to ask the Minister how the assessments are made. He says that they’re made by the board, but are they made in house? Does the department assist the board when they are making those assessments for security?
Earlier in response to questions from Mr. Bromley, I believe, the Minister mentioned that they were in negotiations with a particular development to establish a security. So I’d like to know how these assessments are made and my point is we need to have them as accurate as possible. Thank you.
Thank you. I’ll have to admit that I’m not quite sure how the assessments are made. All I know is they are made by the board. I’m sure there’s a lot of work that goes into them, once they make it and we negotiate with the proponents as to the instrument that they will pay and then we hold that security. Thank you
Thanks to the Minister. The Minister also mentioned in his statement that we are working on short- and long-term policy development concerning the government’s management of securities. I would hope that the manner in which assessments are done would be part of that consideration. Certainly the other day there was quite a consideration of the difference, or the statement that we are using security bonds as opposed to irrevocable letter of credit.
I’d like to ask the Minister, and he may not be able to give me this answer today, but I would like to know from the Minister what the difference is between a security bond and an irrevocable letter of credit and why is it that we have decided a security bond is acceptable as security.
Thank you, Mr. Speaker. A surety bond is what we have accepted in this particular case. It is a bond that is covered by three major insurance companies, and the proponent would pay a premium on that insurance. It’s in effect until we release our interest in it. It’s a very powerful instrument to use. It’s one that’s used widely across the world, my understanding, and it’s one that’s acceptable under the Waters Act, and it does carry a lot of weight. It’s covered by multinational insurance companies, and it is one that we’re using in this case. What that does is it also frees up some capital that the developers can put back into their project, which could add as long as 10 years on to the life of some projects and the jobs that would continue to provide. It is a very strong bond and it is acceptable in development.
Thank you, Mr. McLeod. Final, short supplementary, Ms. Bisaro.
Thank you, Mr. Speaker. Thank you to the Minister. Thank you for correcting me. Yes, I meant surety bond, so thank you for understanding what I meant.
I guess my concern is whether or not the department has looked at situations where a surety bond has had to be used. I appreciate that the reasoning that it frees the company up for capital as opposed to having a letter of credit, which is cash.
Can the Minister, if he has not or the department has not, look into previous situations or situations that exist anywhere in the world where a surety bond has had to be called on and how effective it was in providing the funds necessary for remediation of a site?
We do have a list of instances where it’s been used in the past. I think as we go forward with this, what I need to do is, I need to sit down with the committee that oversees Lands. I need to give them a briefing so we all have a better understanding of the differences between a surety bond and a line of credit. I will commit to doing that at our earliest convenience. We do have examples of where it has been used in the past.
Thank you, Mr. McLeod. Mr. Hawkins.
