Does the Minister have any opening remarks he’d like to make?
Thank you, Mr. Chairman. I am pleased to present the Capital Estimates 2009–2010 of the Government of the Northwest Territories. These estimates outline appropriations for infrastructure investments of $247.616 million in the 2009–2010 fiscal year.
In early 2008 a review was undertaken on the GNWT’s capital planning process. The review identified many challenges faced by the government in planning and delivering capital projects such as the limited resources and capacity to address existing needs, projects costing more than originally estimated; the heated western Canadian economy, which is impacting the cost of construction and attracting needed skilled trades and technical people; and limited competition on large building projects. These challenges have been highlighted through the significant carryovers that the GNWT has had to bring forward for approval by the Legislative Assembly over the last couple of years.
Mr. Chairman, the fact is that the GNWT is no longer the major player in the Northwest Territories’ construction market. Interest in large capital projects has shifted to the mining sector, which has reduced our influence in the construction market, and inflation has eaten away at our buying power.
The findings from the review were presented to standing committee in April, and recommendations were subsequently made to the Financial Management Board for improving how we plan for, acquire and deliver required capital infrastructure. This included looking at the timing of when capital estimates are approved, ensuring a more disciplined and strategic approach to capital planning, improving coordination of planning and delivery, and looking at innovative approaches for the acquiring and delivery of capital projects.
It was clear from these recommendations that the GNWT must take a more corporate approach to planning and delivering its capital infrastructure. The estimates before us today represent the start of this new approach.
One of the important recommendations from the review was to move the approval of the Capital Estimates to the fall session of the Legislative Assembly. This will allow for better planning for both the GNWT and contractors as it means the tendering process can begin sooner; contractors can fit projects into their schedule, encouraging more bidders and therefore obtain the greatest level of interest and competition possible before contractors have already filled out their order books for next summer’s construction season.
Major highlights in these estimates include:
$74.8 million for school replacements and renovations
$59.3 million for highways and winter roads across the NWT
$28 million to continue to base fund municipal governments for community infrastructure
$19.2 million for infrastructure investments for buildings and workspace to help support the delivery of health and social services programming
$13.2 million for information technology projects to replace aged information systems and improve how the government manages and secures health records.
Mr. Chairman, as Minister Bob McLeod stated earlier this session, the GNWT must take the lead and commit to reducing the Northwest Territories’ dependence on fossil fuels to meet our energy requirements. We look forward to hearing your thoughts regarding investments in some of the important energy initiatives that will help us achieve this goal during the business planning and 2009–10 Main Estimates process.
Mr. Chairman, I am now prepared to review the details of the Capital Estimates 2009–2010 document.
Thank you, Mr. Miltenberger. Do you wish to bring in witnesses?
Yes, I do, Mr. Chair.
Thank you, Mr. Miltenberger. Does the committee agree?
Agreed.
Sergeant-at-Arms, please escort in the witnesses.
Mr. Miltenberger, may I have you introduce the witnesses.
Thank you, Mr. Chairman. I have with me Ms. Margaret Melhorn, the deputy minister of Finance and FMB; Mr. Michael Aumond, deputy minister of Public Works and Services; and Mr. Russ Neudorf, deputy minister of Transportation.
Thank you, Minister. We are now ready for general comments. Mr. Abernethy.
Thank you, Mr. Chair. I would like to thank the Minister for coming in today and his staff as well. I will be brief.
Basically, I’m glad that the review has been conducted into the capital process. I’m optimistic that it’s going to be a better way to move forward in the future. I think doing the capital now as opposed to later, after Christmas, tends to make a significant amount of sense. It will give us an opportunity to get ahead a little bit this time.
I’d just like to thank you guys for doing the work and coming forward with this plan. I think it’s a good plan. I am cautious though, obviously. I would suggest that it would be valuable for us to put some sort of not implementation but review process into this whole capital plan — not a review of the capital per se but a review of how we’re proceeding with capital in the future.
I know this is the first time we have done it this way. Once again, I’m optimistic that it’s a good way to go, but I would like to see the Department of Finance put in some sort of mechanism so we can monitor the effectiveness of this and ensure that it is attaining the results we hope it will.
So like I said — I’ll be incredibly brief — I think it’s good. I think you guys have done a really great job. I’m looking forward to moving forward. I’ll discuss the detail when we get into the detail, but if the department could commit to ensuring that we have some sort of evaluation framework in place, that would be fantastic.
Thank you, Mr. Abernethy. Was there a question you want responded to in that?
General comments, but obviously I’m looking for them to commit to putting in some sort of evaluation framework.
Thank you, Mr. Abernethy. Minister.
Thank you, Mr. Chairman. There’s the broader work on the capital planning process. The first significant step is being carried out through the Cabinet Subcommittee for Infrastructure, working through and with the Refocusing Government Strategic Initiative Committee. Through that process we’ll commit, as we bring forward the whole package, that we have the appropriate checks and balances and that accountability is built in so that whatever we do, in the final analysis, is set up to have the proper support and set-up to succeed.
Thank you, Mr. Miltenberger. Mr. Krutko.
Thank you, Mr. Chair. I for one have questions in regard to this process as to how capital has been approved. Yes, we’re into our second year. We’ve concluded one year in regard to the term of this 16th Assembly, so we have only have three years left.
As anybody knows, as long as I’ve been here, if we don’t get anything in capital in two years, it isn’t going to see the light of day until the next election. As a Member who represents small communities and small community infrastructure, there are issues that we’ve been harping about for years and that we fought to get into the capital planning process. To change the capital process in midstream and implement new initiatives that were never part of capital, I find that very unfair to those Members who have been working on issues and to the small communities.
You look at the capital as it’s laid out. Capital has a very important role in developing our social and economic ability in a lot of our communities by way of job creation, business opportunities, employment opportunities and bringing down the social debt this government has by way of income support payments and other payments we make.
I think it’s important, too, that we realize we can’t continue to invent systems for new initiatives to pop up on the books that basically were never there, yet forget that the whole reason we are here is to ensure we do find a system that’s fair to everyone, not just to any particular department or departments but to communities and community infrastructure.
I spoke in this House earlier this week in regard to the over 30 year old facility in Aklavik, the Joe Greenland Centre. All of them were looking at the report that I finally got my hands on. They only spent $200,000 on that facility, and it’s over 30 years old. There are some major problems with that facility in regard to electrical code violations. That facility is not up to code because of it being as old as it is without proper maintenance
I’m talking about motions passed in this house in regard to Members putting forward motions trying to get projects in place, regardless if it’s a school or a road to access gravel, and also projects that will go a long way to improving the quality of life in communities. Previously they had swimming pools that were part of the budget process where few communities would be able to take actions.
Two years ago we basically had a fund in regard to community capacity funding to allow communities to identify projects they’d like to put on the books, but because of the responsibilities we have — and the same in regard to community infrastructure.
We talk about water treatment plants. There was a major study that took place in the community I represent, in Aklavik, in regard to the health issues — the health of the people of the Aklavik in regard to the potential impacts to health from H. pylori that has been detected in several residents. Again, there’s a direct correlation between that and the health of the community and the water treatment facility that they have in the community.
Yet again we have to wait till 2010 for this to become a reality. I think it is important that this might be a new initiative that’s been put forward. I know it was tried in the 12th Assembly, and it lasted only one to two years. Basically, they went back to the old system. My question is: why did they do that? Here we are again trying something definitely….
We’ve got a business planning process in regard to every committee and every department. You go through it clause by clause, line by line and identify those items. Next, beside the document you were looking at, was usually a 10, 15 or 20 year plan, so you could see where these items fit into the plan. You knew they were going to show up eventually and that we stuck to a plan. Right now, from what I can see, there is no plan.
I think it’s important to realize that we as government have some challenges, yes. We’re building $20 million office buildings for the comfort of a few departments, and there was a proposal put forward for $10 million to build the same facility. I have a big problem with that, especially in regard to the whole area of cuts and layoffs.
We continue to go full speed ahead. It depends who gets to the front of the line, gets their capital project into the books and just gets on with it without realizing that there are also political and social impacts that have taken place throughout the Northwest Territories in regard to what we are doing and where we are going.
Again, in regard to Capital Estimates they’re under new initiatives. Of the new items, which are basically coming forward in 2009–2010, a large number are new initiatives. I’m using special warrants. We were told earlier on, back in February when we passed the interim budget, that special warrants were only going to be used for emergency type items, yet we’re seeing items pop up that aren’t of special warrant status.
The other issue I had questions about was in regard to the Financial Administration Act. There were a lot of battles fought in this House in the 13th Assembly and the14th Assembly in regard to capital items. They’d either shown up on the books out of thin air or basically were moved from one Member’s riding into a different person’s riding with no consultation with Members. That was basically added to the Financial Administration Act to prevent these types of things from happening.
Those are the types of concerns I have. I question a lot of these items in front of us because of experience. I’ve seen over the years in this House how people have influence over the budgetary process, for ministerial committees, through departmental priorities. We tell them to cut in one area; they find ways of inventing projects through processes that are new, untried or unknown because of not having done it before.
I’d like it to be possible for us to see some sort of a process of accountability, transparency, actually seeing where these capital projects go in light of particular communities and particular ridings. I’d like to see how many projects are in any particular riding and how many projects are in a particular community to really reflect on exact distribution of wealth — where that distribution is being expanded and exactly what the benefit is to the territory as a whole versus one riding, one region or one community. I think it’s important that we take a close look at that.
In regard to the issue that the Minister touched on about technical services, there was a request for proposal a couple of years ago in regard to telecommunication and cellphone service in all our communities in the Northwest Territories. There was that request for proposal put out there. NorthwesTel did the same thing in partnership with an aboriginal company.
I’m just wondering: exactly when are we also going to look at improving technical services throughout the Northwest Territories, not simply for government purposes but also for the residents in the Northwest Territories? Maybe that is more in line with the question I would direct at the Minister in regard to what’s happened to that proposal. What’s the status of it and, more importantly, where are we going?
In closing, as I stated in my opening comments, if you don’t get your items in this budget, this cycle, you’re basically out of luck. They won’t have seen the light of day. At the end of the 16th Assembly you can talk about it in the next election, because you aren’t going to get it.
Thank you, Mr. Krutko. Mr. Miltenberger.
Thank you, Mr. Chairman. Clearly, there are more needs than we have resources for, so we’re always in the business of making choices.
The majority of the capital items or projects brought forward were already on the table from last year. There were some new ones with Transportation and with some strategic initiatives because of new funding and such. We have shared information with a committee that sorted all the capital projects by constituency so everybody would have an idea of what that looks like.
One of the changes we are trying to deal with, of course, is the issue of carry-overs. Also was the fact that we were approving more and more projects that we weren’t completing. We needed to try to change the cycle and come up with ways to get ahead of that process so we didn’t have so much money tied up on projects we weren’t completing.
We also shared the 15 year plan with committee, I do believe. As we move forward with the work of the infrastructure committee, they’ll lay out all the steps and suggested improvements to the capital planning process. We do look forward to feedback from the Members in terms of what’s being brought forward, recognizing that there is a need, as I indicated in my statement, to get things done.
Our money was being eaten up by inflation, and I know the 12th Assembly, in fact, had this process. The 13th came in, and we changed that process, because we wanted to get the budgets passed.
One of the other big concerns at the time was that the overall budget for the government was often not getting passed until well into the fall, meaning interim appropriations and a lot of other issues around that. Clearly, the capital concerns have reached the point where we have had to reconsider and look at what is the most natural and effective way to deliver capital. That is to try to have the projects ready and the equipment and material on the ground so that you are ready when spring comes to start work.
We look forward to feedback from the community as we move forward with the rest of the work that is being done by the infrastructure committee.
Thank you, Mr. Miltenberger. Moving on, Ms. Bisaro.
Thank you, Mr. Chair. I have a few comments in terms of the process and a lot of questions. We’ll save those for later, but some general comments.
I think the work that is being done by the committee that was undertaking the review of the capital planning process has been very good work. I felt that it was well thought out. They made considered and appropriate recommendations and suggestions for improvement and for changes. I think that as a first go-round this new process has a good chance of success, I guess, for lack of a better way of putting it. I support the process and the schedule, and I look forward to the positive results that hopefully will come out of it.
I do agree with Mr. Abernethy, who spoke earlier, about an evaluation. I think there needs to be some sort of evaluation of this particular process. Whether or not we can make a judgment one year from now remains to be seen, but I think we ought to specify that in a year from now, we will look at the success or failure of certain parts of this particular process. It is intended to reduce carry-overs, and we will have to see whether or not that is put into effect. It is supposed to result in better tender results. We will have to see whether or not that is something that is going to come true. I think I heard the Minister commit to doing an evaluation. I would like to add my voice to that particular concern.
The Minister mentioned that we received an allocation of projects by constituency, by riding, by community. I think there is some indication, in looking at it, that there is an unbalanced allocation of capital. There are a couple of communities that have little to no capital projects in this next year, and there are certainly some projects that we saw in the Capital Plan for ’08–09 that are no longer in the Capital Plan for ’09–10, and that’s a concern. I understand that things were evaluated. Some were dropped; some were added.
My concern is this. Although we were given a great deal of material which substantiated each individual project, I never felt that I was given justification as to why project A was deleted and project B was instituted in its stead. So we lost one and gained one. I understand that we can always have input into which projects are going to be included and which are going to be dropped, but it might be of more benefit to Members if, in discussion with the Minister in trying to understand next year’s capital budget, we get a better justification of why one project is deleted and another one is inserted.
I did want to say the Minister indicated that there is going to be an emphasis on energy initiatives, and I do agree with that emphasis. I think what is being suggested is good. I think we are moving in the right direction as we move towards more provisioning of hydro power as opposed to the diesel that we are using now. So I would like to just indicate my support for that.
We have already done this, but the one time reduction of carry-overs I think was a good thing. If we can get to a carry-over dollar value that is indicative of what our real carry-over is, I think that is far better. I believe we are into making things as close to the truth as they can be and as rational as we can be.
In terms of the change to the schedule and the timing of the capital process it has been indicated to us, and I agree with this belief, that we need a change in the Financial Administration Act. I would encourage the government to go forward with the changes to that act as soon as possible. I don’t see any value in approving our capital budget in the fall but not allowing the money to be spent until April of the next year. The only way this system is going to work is if money can be expended earlier on so that we can enter into contracts between the fall and the next fiscal year.
I appreciate that this budget shows a fairly large emphasis on deferred maintenance. It’s an area to me that this government has put a focus on, and I think it’s something that is much needed. We have a huge backlog in deferred maintenance, and that we’re starting to put an emphasis on it and put some money into it is a good thing.
The only other thing that I wanted to say is that we did not get information on the expenditures or the Infrastructure Acquisition Plan for the NWT Housing Corporation. I appreciate that with this change in timing the Minister wasn’t able to provide that to us at this time in the year. We’re advised in future years that, yes, we will get that information. I would just like to mention that I certainly hope that is the case. I think the Housing Corporation infrastructure should come through with all the other infrastructure plans for the whole of the government for the next fiscal year.
With that, I look forward to going into detail, and I will have some questions at that time. That is the end of my comments, Mr. Chairman.
Thank you, Ms. Bisaro. Mr. Miltenberger.
Thank you, Mr. Chairman. Just to reaffirm, the issue of the evaluation process will be dealt with as we come forward with a full package of recommended changes that are going to be brought forward by the infrastructure committee.
The issue of equity among communities and regions is, of course, one of concern. We want to ensure that we are trying to meet the needs in a fair way. I would like to point out that we do have a $28 million infrastructure agreement and contribution to the communities that’s done on a base plus formula. It now gives communities a significant amount of money that they’ve never had access to before. That was put in place to help them address some of the needs that previously they had a hard time getting on the list.
We as well, to confirm, will be bringing forward the changes to the Financial Administration Act so that they’re ready and in place in time for the next budget cycle for the capital process.
Housing will be part of the process so that it’s all done at the front end, even though housing is now currently dealt with through agreements and through the O&M side. It will be brought forward, because it is really capital, so it’s all on the table through this process.
Just one quick follow-up. I do appreciate that communities do have access to a fairly large amount of dollars for projects on their own, but I was referencing more projects which are territorial in nature, such as airport projects and specifically the relocation of the Trout Lake Airport, which seems to have dropped off the horizon in total.
Thank you, Ms. Bisaro. I’ll take that as a comment. No question. Moving on, Mrs. Groenewegen.
Thank you, Mr. Chairman. First to the Minister’s opening remarks. Interest in large capital projects has shifted to the mining sector, which has reduced our influence in the construction market, and inflation has eaten away at our buying power. I think this is a classic case of throwing our hands up and not trying to think of different ways to do things to make our capital dollars go further.
I’d like to see proof, too, that capital project interests have shifted to the mining sector. You know, that’s an easy thing to say. Where is the proof? I’d like to know how much various contractors in the NWT are providing infrastructure to the private sector versus some kind of a graph that shows some of the projects that have been undertaken in the public sector. I mean, it’s fine to say that and it’s fine to talk about inflation. Certainly, there has always been some degree of inflation, but I think we are rolling over too easy on the cost of some of these things.
Not all of them are competitive processes, the Inuvik school as an example. We’ll get into detail later under Education, Culture and Employment and negotiate a contract. Why? Of course, we have a heated construction market south of us in Alberta, but there has got to be a way for this government to continue to encourage competitive processes. If you can’t get companies to take on full contracts for the whole process, then piece it up. Divide it up. Contract it out.
We have so many professionals who work in the department who are engineers. They have a lot of in house capacity, yet we seem like we contract everything out to do with, well, everything — everything from consulting on what a capital project should look like to what kinds of programs should go in the project. It seems like we contract that out. We have engineers, supervising engineers, with PWS folks.
Why do you hire a project manager with all the credentials of the person you’re going to contract the service to on a capital project? I hope that makes sense. You have people with the same education and experience equivalency that you’re turning around and getting them to supervise the work. I don’t quite understand. I mean, if you want to talk about stretching our capital dollars further….
Anyway, the bottom line is that I think we’re paying too much for our capital projects. I believe in consultation on what these things should look like and what the program’s going to be and the activities that will take place in them, but I think we’re going there too much with a blank cheque and just letting people dream big and dream wild about this. They’re ending up with running up capital projects that are just too expensive. I can’t categorically prove this to you, but people obtain more for less in the private sector than we do as a government. We have to ask ourselves why. Why is that?
When it comes to the prioritizing what capital will go ahead and what will not, I do think there is tremendous inequity, unfairness, in the way that’s done. I don’t think it’s necessary to put almost the entire year’s capital budget in one community and completely ignore the needs in others. I don’t think there’s equity between large communities and small communities.
I don’t know what the magic formula is to getting capital in your community or in your riding. Obviously, I haven’t stumbled onto that, because most of the big projects in my community have been pushed back — the hospital and the school. I’d hate to hazard a guess that there’s a different table you should be sitting at. At the table I’m sitting at and at this table, I’m always promoting and encouraging and asking and trying to, with all due respect and diplomacy, draw attention to the needs of my community, but then we see projects going ahead like the ones that will be contained. But we’ll get into that in the details.
I don’t know why we as a government also need the Cadillac version of everything. I would like to know what they’re paying for schools in southern Canada — big schools, fancy schools. I’d like to know how that compares with what we’re getting on a per square foot basis. I think we’re paying too much.
Another thing that contributes to our costs is the amount that we spend on what we call the soft costs, the engineering and the architectural. Again, I think we walked up to some of these folks with blank cheques in our hand, and the sky is the limit. We keep talking about the competing interest for capital. If that’s truly the case, then we need to look at every area that we can economize.
Going forward after capital projects are built, it would be really nice in the design and planning of these if we would take some of the ongoing O&M costs into consideration too. I haven’t been fully convinced that the whole energy conservation thing has actually hit home with some of these projects yet. I think we’ve seen a tremendous increase in the cost of utilities and will continue to. There must be ways of building more energy efficiencies into these buildings. I’d be very interested in hearing from the Minister what kind of emphasis is put on that when all of this consultation and program review goes into these projects.
Even when you apply a factor of costs for remote and rural locations, all those kinds of things, I still think we are paying an extraordinary amount for our capital projects here in the North. I again would be interested in seeing, on a square foot basis, what kind of a rate we’re paying compared to similar infrastructure that is built in southern Canada.
I think the process has improved. I do support this new timing. I think there is still a lot we could gain by consulting with people in the industry. We’ve been talking about that, and I understand that maybe there’s a paper or a report in the works right now with the NWT Construction Association. I think we need to view them as our partners in this discussion and lay it on the table that we have a lot of demands on our capital, a lot of needs. We need to work with them. Northern industry wants to see benefit from the money that our government spends. We want northern preference. I think we need to talk to them about what we can do as a government to get as much as we can for the dollars we have.
I think they are willing to talk to us about that. I’ll be very interested in hearing what they have to say. It has been on our agenda for a long time, to meet with those folks. That is about all I have to say right now in the general comments. Thank you, Mr. Chairman.
Thank you, Mrs. Groenewegen. Minister.
Thank you, Mr. Chairman. The work of the infrastructure subcommittee that is looking at the whole capital planning process is, in fact, trying to identify and come to grips with recommendations to deal with issues that the Member has raised: the concern about overdesign, the cost factors, the issue of standardized designs, the moving towards bundling of projects so that we can in fact be more efficient.
For us the evidence over the years has been clear in terms of the cost, the number of carry-overs, the number of tenders where there was one bid or no bids or bids that are not even close in terms of the difference between the cost of the estimate versus what was being offered. So there are a whole number of things that we agree have to be looked at and that we’re trying to come to grips with, which is why we started this process. There was a general concern that we could restructure government processes to be more efficient, effective and economical.
We have no design architects, for example, on staff, so that’s one thing where we do contract. Many of the project people, given the very many numbers of projects, have to be prepared to supervise multiple projects, often spread out over a fairly wide area. As well, we are working to get better and better at our conservation standards for northern buildings, for our institutional buildings. We see the Greenstone Building that the federal government has built as a model for efficiency that we’d like to be able to try to reach. And we are continuing to work with and consult with the northern contractors, the architects, the construction society. We once again are looking forward to coming back to committee with the completed work of the infrastructure subcommittee that will hopefully address these issues in greater detail. Thank you.
Thank you, Mr. Miltenberger. Moving on. General comments, Mr. Ramsay.
Thank you very much, Mr. Chairman. I want to start off saying how impressed I was with Public Works and Services, Mr. Aumond and his staff, in getting us to this stage. I think they are to be thanked for the work they’ve done.
For a lot of the reasons that have already been discussed by my colleagues here today, there are some challenges whenever you look at changing the way you do things. I think there will be some growing pains as we go through this new process.
However, I do believe and am of the opinion that we will get better tendering results and we’ll reduce the amount of carry-overs that we have from year to year. I think those are two primary objectives that we need to keep in mind.
I also agree that the evaluation that other Members have talked about is important. It’s an important piece of the puzzle as we move forward. We should always be trying to do things better.
I’m a big fan of the standardized design from community to community. I think oftentimes things get off the rails. We go with Cadillac versions; we go with overspec’d buildings; we go with whatever the list of people we talk to wants in a building. It’s nice if you have you money, but I think in today’s day and age and with the cost of construction in the Northwest Territories, standardized designs…. Some people might not like it, but I think the utility of the buildings that we build and the designs that we use should be standardized. We should get more for the capital dollars that we have. Again, I’m very supportive of standardized designs.
Just a couple of observations. I agree with some of the comments, too, about the unbalanced capital dollars in various ridings. Specifically, I’ll point to a few ridings, Nunakput for one. Mackenzie Delta and Tu Nedhe are scarce in capital dollars over the next four years, whereas ridings in Inuvik, Fort Smith and, to a lesser extent, Yellowknife are receiving the bulk of the capital dollars. I’m very grateful, believe me, that a project like St. Joseph school is off the ground and being done. That was a very necessary move by the government to get that renovation program going, and I’m very thankful for that. I’m also thankful for the movement on the Kam Lake bypass road. Those are two issues that I’ve been bringing to the table and fighting for.
I do understand and appreciate where some of my colleagues are coming from when there isn’t a balance on capital spending in the territory. I think going forward we need to try to ensure that we get a balance on that capital spending so that all communities can share equally in what dollars we do have. There are competing priorities and demands in every one of our communities that we represent, so looking at that would be a good start.
I always wondered how a school in Inuvik could cost us $120 million. We just built one in Tulita that was $24 million. The retrofit that’s happening currently at St. Joseph’s is a major retrofit; it’s about $32 million. Why is a school costing us that much money? I don’t understand how it started off at $84 million and then went to $90 million and now is over $110 million, and even earlier today the Minister didn’t know how much it cost. We really need to get a handle on it. The school needs to get built in Inuvik, but can somebody explain to me why it costs $120 million to build a school there?
Again, I think the issue that Mrs. Groenewegen brought up about consulting people in the construction industry is a good one. I think we have been waiting for a meeting. We’re looking forward to getting together with those folks in the construction industry, the architects, the engineers, anybody that has any insight into how the government operates and gets capital projects started and built in the territory. Any feedback we can get from people, we’re willing to take.
I know Public Works and Services, like I said, has done a yeoman’s job in getting us to this stage. It’s going to be a process that’s different to people, but I think it’s one that is workable and one I’m willing to support for the time being. I look forward to an evaluation sometime down the road, Mr. Chairman.
Thank you, Mr. Ramsay. Minister Miltenberger.
Thank you, Mr. Chairman. I appreciate the Member’s comments about the process. To try to address some of the issues that we’ve now talked about, I would just like, for the record, to note, if I could — it’ll take me about 30 seconds — that the Deh Cho, between 2009–2010 and up to 2011–2012, will be getting, according to this, $20.806 million; Hay River riding, $74.320 million; Inuvik Twin Lakes, $138.225 million; Mackenzie Delta, $2.745 million; Monfwi, $7.295 million; Nahendeh, $10.3 million; Nunakput, $12.360 million; Sahtu, $49.976 million; Thebacha, $28.610 million; Tu Nedhe, $7.365 million; Yellowknife, $145.966 million.
Thank you, Minister Miltenberger. Next on the list is Mr. Hawkins.
Thank you, Mr. Chairman. I won’t use a lot of time, but what I want to do is cite timing and process. First on the timing. I really like the timing. One of the complaints I generally hear and can obviously see is that timing is a problem. It’s been cited before, but I think it’s important to put it on the record from my perspective. When we approve the capital budgets at the end of March, it doesn’t get ignited into the realm of reality until April, May, June. Tenders come in; projects don’t start until the fall — those types of problems.
Now, that’s obviously not every project. We know that. But the reality is that timing becomes a significant issue in our very short construction season — our season when we have to send things up by a barge, our trucking season. If you live in one of those communities in Nunakput riding, you need to get that big barge all the way around. You know there are a lot of facilitative problems for planning. So, on timing, I’m really pleased with this idea of moving it forward. It’s something I sincerely support, and I want to thank Public Works in the effort that they have done to collaborate on this.
Some of the best work I’ve seen lately was one of the briefings we had a little while ago about Public Works understanding the tough challenges of delivering things on time, on budget and facilitating that. To me this sort of dovetails nicely into realizing that, yes, we have a problem, and now we are finding solutions for it. So my compliments go to the department and the team that worked on this. I know it wasn’t just one individual; it’s a team.
As far as the product, we now have a capital plan for our estimates that…. I think we’re given it as a lump sum. My first inclination would be to say: is transparency being served? To be honest, I think the government was being fleeced before. It didn’t take much of an effort to say, “Well, jeez, the government is looking for a water truck. How much do they have budgeted? Oh, it’s $180,000, so I better bid $170,000,” and keep on maximizing their bids every single time, in my view, and taking advantage of that. To my mind, that leads to project overruns; that leads to capital projects. When an architect sees that a school is worth $40 million, they design it exactly at $40 million, and of course there are cost overruns.
I think by subtracting those numbers again, although I normally fear transparency being lost, the sum totals will be all rolled together, and each line item will be delivered as sort of a product bunch. I’m very pleased by this approach, because we take doing the tough work out of a competitive bid process. We take away the low lying fruit from those people who would be bidding on this by us doing the work for them. I’m hoping that in time we’ll start to get more competitive bids, because people actually have to earn and work a little harder for them.
I won’t cite an example, because I don’t want to narrow it down, and I don’t want to put a spotlight on it, but I am aware of an example where the number wasn’t necessarily that public, and there was a competitive process that shone through and gave us an excellent price and certainly will deliver a quality product. To me, in my mind, without the business community, whether it’s people who build and deliver water trucks or those people who design schools or hospitals or whatever, if we are not telling them how much money we’re willing to spend, that makes them sort of sharpen their pencils. They’re going to put in a proposal for the best dollars that they think we can accept. Certainly, that will work in the long haul.
Mr. Chairman, I have one question — I certainly hope it wasn’t asked already — for the Minister at this time. We are on the threshold of a new process that I think will deliver better bids in the long haul, which will deliver better accountability on our fiscal numbers over the long haul. Is there any strategy to create a check and balance system so that maybe in one year or two years there’ll be a review of how our competitive process has worked since we’ve taken out every single line item dollar and sort of bunched it up as one bottom line dollar for each individual department? Will they do a bit of a review to find out if it’s working with this method, that we’ve created a better competitive environment from the territorial perspective?
Thank you, Mr. Hawkins. Minister Miltenberger.
Mr. Chairman, first I’d just like to acknowledge the Member raising this concern about too much information on specific contracts that skewed the tendering competitive bid process. We’ve attempted to address that.
In terms of the evaluation process, as I’ve indicated — it’s been raised by yourself, Mr. Chair, and a number of your colleagues, including Mr. Hawkins — we will come forward in the final analysis, as we finalize the process, with that component built in.
I just want to again say that too much information in the competitive process, by us giving it away, is like telling everybody what to bid. I just want to say it’s an issue near and dear to my heart, to show that we’re working as hard as we can to get the best prices for products. I cannot emphasize enough to the folks from Finance, obviously, from Public Works and everybody else who put this package together that it’s a good product, and I think it will serve us all very well going forward. I’m extremely thankful that the Minister, as well as many other government staff, heard the calls of people like myself and other Members — a feeling that we need to deliver a better product. So I’m very thankful on this example.
Thank you, Mr. Hawkins. I didn’t hear a question, so I’ll move along to the next person on the list. Mr. Menicoche.
Thank you very much, Mr. Chair. I’m glad to be reviewing the capital estimates of 2009–2010. As we had deliberated on the document and the different challenges, I, of course, have a regional perspective, more particularly from my riding. Roads and highways and our winter roads are of prime importance. There’s not a day that goes by that we’re not affected by the roads and the ability to travel on the roads. Particularly this spring, for instance, on Highway No. 7 there was actually a major failure in the base of that road, and they actually shut the highway down. That created a lot of excitement, if only because the highway is one of the ways that we get tourists up to our region, over to Fort Simpson. Those tourism dollars are important, just like anywhere else. As soon as the word got out that the highway had failed, word of mouth went far and wide.
It just goes to speak about the replacement of the roads or the complete rebuilding of the road that’s been on the books for some time, especially for Highway No. 7. I know that government in the last term had allocated a feast of dollars to it, and I’d like to see that level of expenditure continue. I’m glad to see it in here, but I’d also like to see, because it’s a major highway — in fact, it’s mentioned in many of our documents as part of a highway strategy — that a priority be included in reconstructing those portions of the highway. Like everywhere else, it’s about 30 or 40 years old. It will be prone to a lot more failures, and I don’t want to see that happen. I’d like to see the department concentrate on it.
To me it kind of looks like there may have even been a decrease in expenditures on Highway No. 7. Maybe the Minister can comment on that. I certainly don’t want to see that, especially not now. It’s no time to be reducing expenditures on that highway. The support for that highway has got to be at least the same or better than it was.
As well, in terms of our infrastructure I’ve noticed that in terms of our airport systems, one of the projects that we’ve been pushing for doesn’t even show up on the books anymore, Mr. Chair. That is, more particularly, the Trout Lake Airport relocation project. My colleague Mr. Abernethy has pointed it out as well. Sometimes projects fall off the books. Sometimes projects remain on the books, but they remain in the capital plan. In this case, this particular project fell off the books as opposed to remaining on the capital plan. I’ve always maintained that it takes a lot of hard work just to get projects on the books, and to have it just fall off from one sitting to the next, without explanation or without even notifying me as the MLA, is kind of odd. I’d certainly like a good explanation of that.
At the same time, we’re reviewing our documents here. If the priority is not there for that project, but it should at least appear on the capital plans for future years and show up in that, then it would be very important to have that included. We do that in many different areas, many different regions. We take one project and say: okay; we can’t do it this year, but in future years we’ll do it. It remains on the books and highlighted, especially in documents such as this. At the bare minimum, Mr. Chair, that’s something I would be seeking: put it on the books; keep it on the books.
You know, I understand the many different priorities and initiatives that government has and the limited resources, but at the same time, we’ve got to strive. Future changes to the aviation guidelines and regulations impact the Trout Lake community as well. Just by not addressing those concerns…. A lot of it, of course, is haste, you know. Everybody knows in the whole transportation system that when they built that airport, it was actually part of the road, and to save costs they just built it on there. I think people and engineers from that industry kind of…. They had indicated that that’s not the best choice for alignment, and that’s the real issue here. Once you align it to prevailing winds, then you get safe transportation infrastructure. That was all Trout Lake and the aviation industry is looking forward to with the move to the building of this relocation project.
Anyway, these are arguments they use — and many, many more — in order to get this project on the books. To have it not on the books anymore is kind of like: what has happened to it? Does it mean it’s dead? But for me, I’d like to see it on the books in other years, in future years. If that’s the route we have to take, then I think that’s the route we should take, Mr. Chair.
Otherwise, I’m well aware of our capital infrastructure planning and guidelines. I think that we are on the right track with this dialogue that we’re having, this communication, as well as outside of this House and in the committee system. It goes a long way to re-evaluating what projects are important.
That goes the same for just dealing with the new issue of some renovations, as well, for the Fort Simpson hospital. There are some renovations planned. They’re off the books now, and we’re not too sure what’s going on with it. It doesn’t mean that it’s dead; it doesn’t mean that it’s planned for other years. We don’t even see it on the books anymore. Again, that leads to a question. For us it’s still a priority. We’d like to get those projects done. We’d certainly like to see it mentioned in documentation that it’s still a priority. It still is a priority for our people, for our leadership and for our community.
So with that, Mr. Chair, I know that the Minister has been given the opportunity to respond to other Members, and I’d certainly like to hear his responses to my concerns. Thank you.
Thank you, Mr. Menicoche. Minister Miltenberger.
Thank you, Mr. Chairman. Highway No. 7 is on the books for the next four years — $10.6 million, roughly $2 million a year. That funding is now coming out of strategic initiatives.
The Trout Lake Airport extension was removed as one of the choices made because of the physical challenges, which we’ve tried to explain to committee. We are continuing to look for funding so we get it back on the plan. We know the need is still there, and it will make its way back. At this point, though, we are pursuing funding.
I don’t have any information before me on the renovations for the health centre, but by the time we come to Health, we’ll have that information.
Thank you, Minister Miltenberger. Next on my list is Mr. Beaulieu.
Thank you, Mr. Chair. I am happy with the timing of the way capital has been rolled out. I think the sooner we get this out, the better the chances of us actually completing the projects are. I see some problems with the allocation because of the capital planning.
In reality, in Tu Nedhe over the next four years, plus future years, what was allocated outside of what we considered, areas like that highway, was actually some holdback money, which is very interesting, I found. They have no capital projects in two of the communities at all. The only capital project that appeared in Tu Nedhe is the capital project that is either holdback or warranty money from a project that was completed this fiscal year. Nothing in Fort Resolution at all.
However, we do have some money put into areas of the highway that leads into Fort Resolution. One of the ways that the government can resolve a lot of capital issues or even a lot of issues of employment…. All kinds of positive results could be from actually spending every cent that is put into the capital plan each year. The fact that we continue to carry over a lot of projects is an issue. Just as indicated in the Minister’s statement, inflation is eroding capital projects. That is true too, but if you take a project that was supposed to be scheduled for one year and it’s not done till two years later, then there is an additional two years of inflation erosion.
I think the various departments could look at innovative ways to complete capital. I know there are a lot of unemployed equipment operators in Fort Resolution, as an example, and lots of local equipment that could be utilized to do these projects. I know that even the one project that’s related to Tu Nedhe that’s on the books is maybe about a quarter of what’s needed to actually complete the project 100 per cent.
I looked at the 20 year capital needs assessment of the government, and I’m not seeing anything in the 20 year assessment in Tu Nedhe, Lutselk’e and Fort Resolution. However, I’m sure that the 20 year assessment is not done only once, so I’m comfortable that something will end up in the 20 year assessment.
Talking specifically on the 20 year capital assessment, my understanding from talking to some of the people that were involved in the capital assessment was that inside the 20 year capital needs assessment you look at what type of capital is the ultimate and not the capital that’s needed by the GNWT and the communities over the next 20 years and mid-life — I’m not sure what it will be called, but some sort of mid-life retrofit will fit, for lack of a better word. Inside the 20 year assessment we are looking at some mid-life and some replacements, and I found that to be interesting, because a lot of the capital has moved now. The capital that is really needed has moved to the communities, and then the communities aren’t adequately funded to address all of their capital needs. There is funding that I think should eventually get to it, but it is not really adequate funding.
It’s a strange thing that I saw looking at the capital plan. I noticed a replacement of major heavy equipment, and it was dropping amounts of $240,000 or $170,000 to replace pieces of equipment that under a normal 20 year capital needs assessment wouldn’t have even gotten to the mid-life retrofit. They are already shot and being replaced. I asked the community, “Why is that water truck,” which is six years old and broken down, “parked in the garage and you guys are renting a water truck from a private company to haul water when you have two water trucks that are relatively new?” The simple answer was that there is no actual maintenance on any of this equipment at all, because years ago the government made the decision to pull all the mechanics out of these small communities.
So now instead of spending $20,000 to retrofit a piece of equipment, say a Cat or a grader or something, it’s replaced. That puts a tremendous amount of strain on the capital, obviously, at the community level. The community goes in there to have a plan to do something. They don’t have the people in the community to maintain their equipment. There are no meters on any of the equipment saying that equipment runs for 2,000 hours and you have to do this, this, this. There’s no maintenance manual. This is just equipment. You put them on the road; people jump in and drive them. They do their thing, and when it breaks down, then you buy another one. So I found that could really be an unnecessary strain on the capital.
I don’t have much time here, but just to touch a bit on the New Deal. I found that looking at the capital plan in the New Deal, there’s just not enough capital money. The overall amount sounds fairly impressive at $28 million, but in reality, when it gets down to the communities, the community can’t do the major things that need to be done. A major thing that has health implications and all kinds of other implications…. When you keep pouring dust over the entire community all summer long, there are health problems. It creates all kinds of problems. Even a house creates problems.
Just the simple fact of chipsealing the entire community, getting away from replacing equipment all the time that shouldn’t be anywhere near its mid-life and putting that into chipsealing and doing something for the youth.... I thought that a summer swimming pool in Fort Resolution or Lutselk’e would be something that can be really positive and something that has lots of benefits to it. But with the amount of money they’re getting and the size of the community and it’s basically almost allocated per capita — I am not one hundred per cent sure, but it is relatively close to that — they just don’t have the money to do things like that. So as long as their money is given to them and there’s no support as far as maintenance goes on the items, and they are never ever going to get paid enough money…. I recognize that they have mechanisms in place that allow them to do that, but that’s going to be really difficult for them to do.
So I guess my hope is that for Tu Nedhe — I am just about wrapped up here — the deferred maintenance program, I think, would be something that is needed. The NWT Housing Corporation programs, when they roll out…. I am hoping that with some of those programs — a lot of those programs are sometimes difficult to access as well — the government can find a way to deliver those in conjunction with some of the energy programs and so on. But think I’m out of time, so that’s it, Mr. Chair.
Thank you, Mr. Beaulieu. Minister Miltenberger.
Thank you, Mr. Chairman. I agree with the Member about the need.... I think it has all been identified, the issue of deferred maintenance both for buildings and equipment and the cost that there is built up if we don’t do it right. As the Member indicated, the 20 year needs assessment will be reviewed and revamped on an ongoing basis as some projects follow up and get built and other ones come on.
Just for the record I would like to note that the money going to communities is the $28 million from the capital formula that is being proposed and another $6.1 million under the Building Canada fund, $14.6 million under the gas tax for a total this year of $48.7 million going to be allocated to communities on that base plus formula. In the case of the Member for Tu Nedhe, that will give the Fort Resolution community $1.2 million and Lutselk’e $1.1 million. So it gives them funds that they never had and an opportunity to do some planning with the recognition that they will get money.
The Member and I have talked about this as well, and I have referenced it in my comments. As we come forward with the O&M budget, the issue of funding that we are going to bring forward, proposed and targeted for alternate energy projects, is going to be an important piece. Clearly, one of the items that as the government we are interested in working with the Legislature on is the whole issue of mini hydro. It is our hope that when the budget is approved, we will then have the resources to, in a very concrete, meaningful way, approach some of those projects with resources to advance them significantly.
Thank you, Minister Miltenberger. Next on my list is Mr. Bromley.
Thank you, Mr. Chair. I want to empathize with some of my colleagues’ comments as they look for specific projects, at least in the longer term plans. I know this is general comments, but I have to say I’m still looking for the Dettah road reconstruction. I’m sure it’s there somewhere.
I do also, as many of us do, appreciate this new approach, which is an attempt to come up with appropriately designed infrastructure that will meet the needs of our residents and also the size of our pocketbook. We have a clear and dramatic pattern of annual increases in the cost of things and annual increases in the size of the carry-over. I think there is hope that this new approach will establish parameters that ensure we get the best value for our money and guard against these sorts of cost overruns and carry-overs. Basically, this is an attempt to get a grip on reality and to respond, and I am very supportive of that.
The process is also beginning to recognize the importance of identifying operations and maintenance costs associated with facilities. I think we probably should go beyond that in some cases. Increasingly in jurisdictions around the world, with building infrastructure and other infrastructure, it’s being required and designed to generate the energy it will use and more. They will contribute energy to the grid, part of the distributed energy system. The latest technologies are out there. I think we’re moving in the right direction. We’ve got some good initiatives started. But we need to continue to learn about where the progressive thinking is on this and what the real opportunities are for getting ahead of this sort of thing. These costs are not going to go down, and we still have other opportunities that we can implement here.
I’m pleased to see that a value analysis on each major project will be done to provide some measure of accountability to ensure projects have met the conditions of their approval. This is an important tool for management and oversight and could be useful in my next concern, which we have heard about already, and that’s recognizing that this is a new process. It is important that we establish a way to evaluate this new approach, its capital planning, and to build that into the implementation plan. Certainly, now is the time, rather than later, to determine the key needs and areas for evaluation and to identify the date for an objective assessment. There is somewhat of a record of us undertaking an evaluation and belatedly finding out we haven’t collected the right information to be able to do a good evaluation of the processes.
This type of focused evaluation will help to identify gaps in the process, incorporate lessons learned and ensure we are meeting the intended outcomes established by the Ministerial Subcommittee for Infrastructure. I’m thinking quantitatively in some respects. I would like to see this plan. I know Members would be interested in reviewing this evaluation framework and having it become a bit of a formal process reported in the House, back to the Assembly here, in a way that the public can feel confidence in what our experience is. It brings an element of accountability that we should willingly assume.
On the environmental side, again with infrastructure, I would like to see a protocol developed that gives each infrastructure an objective environmental sustainability rating that will allow us to truly consider the environmental impacts and benefits of projects on a comparable basis. Again, this is just a progressive way at getting a grip on the realities that we are facing.
I have a general concern — and we’ve talked about this a little bit — about the level of expenditures on electronic data processing and records storage for our relatively modest population of 40 some thousand people. This seems to be like quicksand, basically. It’s time for us to step back and consider how far and how fast we want to go down this road. I know there are some efficiencies; we need to be able to interact with the rest of the world. I recognize that the health records and systems interact, especially with Alberta, and have special needs. So I throw this comment out with those sorts of caveats on it.
But in the vast majority of cases these are not frontline delivery questions, and we have a lot of frontline delivery questions that are not getting the attention they need. We need a critical look here and a balance, recognizing that these are, to some extent, common to everybody. I suspect there is an opportunity here for some critical evaluation and perhaps some savings. I know we are also playing a little catch-up there in terms of storage and so on. So I want to leave it at that, and thank you for the opportunity to comment.
Thank you, Mr. Bromley. Minister Miltenberger.
Thank you, Mr. Chairman. As the Member noted, the Dettah road reconstruction is out there somewhere. It’s not readily apparent over the next number of years, but we appreciate the comment.
On the issue of a protocol for environmental sustainability ratings I’ll have to ask at the appropriate time for Mr. Aumond to reply to that. Clearly, the issues of energy efficiencies and the long term value we’re going to get for the money we are spending on the capital project are very important ones in this day and age. I might ask, Mr. Chair, with your indulgence, if Mr. Aumond might add a few comments on that, and I’ll come back to some of the Member’s other concerns.
Thank you, Minister Miltenberger. Mr. Aumond.
