Merci, Monsieur le President. Your Standing Committee on Government Operations is pleased to provide its Report on the Review of Bill 1: Western Canada Lottery Act, and commends it to this House.
Introduction
The Standing Committee on Government Operations is pleased to report on its review of Bill 1: Western Canada Lottery Act.
Bill 1, sponsored by the Department of Municipal and Community Affairs (MACA), repeals the existing Western Canada Lottery Act (WCLA) and replaces it with a new act to establish a Northwest Territories Lottery Commission, under the direction of the Minister, with the authority to enter into agreements with the Western Canada Lottery Corporation (WCLC), and the Government of Nunavut and retailers.
The act also establishes a Northwest Territories Physical Activity, Sport and Recreation Fund ("the fund"), pursuant to Part 7 of the Financial Administration Act (FAA). This special purpose fund, which will form an account within the Consolidated Revenue Fund, will receive proceeds from the operation of lotteries by the WCLC. The commission will be responsible for the conduct, management and operation of lotteries, while the Minister will administer the fund and distribute proceeds for purposes related to the promotion and delivery of physical activity sport and recreation programs.
Bill 1 received Second Reading in the Legislative Assembly on October 20th, 2017, and was referred to the Standing Committee on Government Operations for review.
Background
Currently, the Western Canada Lottery Act (WCLA) authorizes the Minister to enter into agreements with any corporation established to conduct the Western Canada Lottery, for the purpose of undertaking, organizing, conducting or managing the Western Canada Lottery in the Northwest Territories.
The Western Canada Lottery Corporation (WCLC) is a Canadian non-profit organization, founded in 1974 and headquartered in Winnipeg, Manitoba, that operates lottery and gaming-related activities for its members; the governments of Alberta, Saskatchewan and Manitoba. Yukon, the Northwest Territories, and Nunavut participate as associate members.
The WCLC works in conjunction with the following marketing organizations: Alberta Gaming and Liquor Commission; Saskatchewan Lotteries; Manitoba Lotteries Corporation; Lotteries Yukon; and the Sport North Federation, which signed a licensing agreement with the WCLA in 1979. In 2009, the Northwest Territories Sport and Recreation Council (SRC) became the designated licence holder.
In 2011, the Canada Revenue Agency advised the licensee that conduct of the lottery was a for-profit activity and, therefore, income was taxable under the federal Income Tax Act. In November of 2014, the Canada Revenue Agency provided this interpretation to the Department of Finance.
In December 2014, MACA reviewed options with the Departments of Finance, Justice and Human Resources for shielding lottery proceeds from taxation. This bill represents the culmination of that process.
The Public Review of Bill 1
The Standing Committee on Government Operations held a public hearing on Bill 1, in Yellowknife, on February 7, 2018.
The committee chairperson opened the meeting, followed by opening remarks by the honourable Minister of Municipal and Community Affairs, who was accompanied by the following officials:
Ms. Eleanor Young, deputy minister, Municipal and Community Affairs;
Mr. Ian Rennie, legislative counsel, Department of Justice;
Mr. Ian Legaree, director of Sport, Recreation and Youth, Municipal and Community Affairs;
Mr. Gary Schauerte, director of Corporate Affairs, Municipal and Community Affairs;
Ms. Melissa Kruger, senior policy and legislative advisor, Municipal and Community Affairs; and finally
Ms. Mira Dunn, ministerial special advisor, Executive and Indigenous Affairs.
The committee takes this opportunity to thank Minister of Municipal and Community Affairs and her officials for their appearance before the committee.
The hearing was extremely well attended, with approximately 30 members of the public in attendance. The standing committee thanks everyone who came to the meeting, especially those who took the time to provide their input through written and/or oral submissions. All written submissions received by the committee are appended to this report.
What We Heard
More funding for the arts
Committee was struck by the conviction with which witnesses spoke of the many positive benefits derived from the participation in artistic endeavours, including the creation of jobs and economic opportunities; the provision of educational and personal growth opportunities; mental health benefits; the contribution of arts to vibrant and attractive communities and to civic engagement; and the impact of art on our northern cultural identity and the creation of cultural legacies.
A few witnesses spoke of the value that would be derived by members of the arts community in Yellowknife, if people who wanted to participate in artistic pursuits had a publicly funded building in which such activities could be housed. They stressed that art supplies and materials can be cost-prohibitive and noted that a public arts facility would make art a more viable option for the less privileged members of our community, especially youth. They spoke of the benefits enjoyed by sports enthusiasts who have both the Yellowknife Multiplex and the Fieldhouse in which they can engage in sport and recreation activities. They asked only that Yellowknife artists be given the opportunity to enjoy similar benefits.
Speakers stressed the importance and necessity of territorial government funding to a thriving arts community in the Northwest Territories. Many wanted to see greater funding for the arts from the GNWT, and expressed the hope that Bill 1 would provide an opportunity to direct additional funding to the arts through the proceeds derived from the Western Canada Lottery program. Some witnesses also noted that they would like to see the arts benefit from multi-year funding arrangements, similar to those enjoyed by territorial sports organizations, which would allow them to stabilize their programming and enable them to spend less time preparing annual funding requests to be submitted to the NWT Arts Council.
At this time, Mr. Speaker, I'd like to turn the report to my colleague, the honourable Member from Sahtu.
Masi. Member for Sahtu.
Thank you.
The definition of "recreation"
In both written and oral submissions, witnesses raised their concern that "recreation" is not defined in the bill. When questioned about this, Minister Cochrane indicated that MACA is looking to the members of the Northwest Territories sport and recreation organizations to define what "recreation" encompasses in an upcoming engagement exercise. When questioned about the possibility of including representatives of the arts community in this discussion, Minister Cochrane replied that she was not willing to entertain this request.
Witnesses expressed their profound disappointment at this response by the Minister. "This move," in the words of one witness "seems blatantly biased in the favour of the established and well-supported sports groups, which benefit directly from their secured and relatively stable funding, and close ties to the GNWT."
With respect to the issue of the definition of recreation, one written submission pointed out a definition would provide some clarity for sports organizations as to their ability to access this funding, and it would also help to clarify which types of sports-related activities are eligible for funding.
No erosion of sports funding
A number of witnesses indicated their preference that the Western Canada Lottery proceeds continue to be used solely for the continued funding for sports and recreation pursuits. They stressed the degree to which the sporting activities already rely on the tireless efforts of volunteers. They also expressed concern about their ability to continue to deliver the existing range of sport and recreation activities, presently offered across the Northwest Territories in the event that funding is reduced by being split between the arts and sports and recreation activities.
Mutual support from both communities
Committee feels compelled to acknowledge the overwhelming support that advocates for both the sport and recreation and arts communities expressed for one another. Regret was expressed by witnesses that the circumstances of Bill 1 appeared to split these two communities against one another. Committee agrees that this is unfortunate and should not be of the case. Overall, committee observed that representatives of each community had respect and admiration for the goals and aspirations of the other, and that both acknowledged vital benefits that sport and recreation and the arts provide to the people of the Northwest Territories.
At this point, I will pass it on to the honourable Member for Deh Cho, Mr. Nadli. Mahsi.
Masi. Member for Deh Cho.
Thank you, Mr. Speaker.
Issues with specific provisions of the bill
While there was limited discussion in the public hearing about the merits or drawbacks of particular provisions of the bill, specific issues were raised in the written submissions received by the committee. These include:
The need for greater transparency
A concern was raised that the bill does not contain any provisions requiring public disclosure about how the proceeds of the lottery will be disbursed to sport organizations.
Multisport games funding
Concerns were raised about the inclusion of multisport games funding under subsection 6(1) of the bill. In written submissions, witnesses sought clarification about how this funding would impact existing multisport games funding provided by MACA. They also expressed concern that the hosting of multisport games, which is an expensive undertaking, should not come from lottery funding to the detriment of sport and recreation partners that already rely on lottery funding.
Ministerial authority to accumulate a surplus or deficit in the Physical Activity, Sport and Recreation Fund
Subsection 6(2) of the bill waives the applicability of section 101 of the Financial Administration Act. This has the effect of enabling the Minister to accumulate a surplus or deficit in the Physical Activity, Sport and Recreation Fund. Concern was expressed that, if this is permitted, MACA will be able to overspend the fund on an ongoing basis, with the end result being that the fund will never be in a position such that it can be used for new initiatives.
Shielding lottery proceeds from taxation
One of the primary purposes for Bill 1 was to bring the administration of the Western Canada Lottery program under the auspices of the Department of Municipal and Community Affairs, to protect lottery proceeds from potential federal taxation.
There was acknowledgement by some witnesses of the wisdom of this course of action. No one expressed any reservations about this objective.
What We Did
More funding for the arts – outside the scope of the bill
From written submissions received in advance of the hearing, committee was aware that there would be strong representation from members of the arts community who wanted to see some of the proceeds of the Western Canada Lottery directed to performing and visual arts endeavours.
For the record, when contemplating changes to a bill that has been referred by the Legislative Assembly to a standing committee for consideration, the committee must operate in accordance with procedural rules regarding the admissibility of any proposed changes. These rules may include, among others, consideration of the principle and scope of the bill, the relevance and/or consistency of proposed amendments, and the prerogative of the Executive branch of government to bring forward legislation that would impose costs on the public treasury.
In preparation for the public hearing, the committee engaged the Legislative Assembly's law clerk to consider if an amendment to Bill 1 to permit the proceeds of the Western Canada Lottery to be directed to the arts would be in accordance with the relevant rules of parliamentary procedures. Based on the advice received, the committee chair determined that such an amendment would be outside the scope of the bill and, therefore, beyond the authority of the committee to propose.
The committee chair made this clear in his opening remarks, to ensure that members of the public did not leave the public hearing with an expectation that the standing committee would be in a position to propose an amendment to the bill to permit lottery funding to be directed to the arts.
It is clear from the passion with which presenters spoke that greater funding for the arts is important to people of the Northwest Territories. This was also evidenced by the February 21, 2018 presentation of a petition in the Legislative Assembly by the Member for Yellowknife North, Mr. Cory Vanthuyne, on behalf of 314 signatories, requesting that the Government of the Northwest Territories amend the Lottery Act to allow for lottery money to be disbursed to artistic endeavours.
The committee regrets that Bill 1 did not provide this opportunity in the way that members of the public hoped it would. However, the committee is pleased to note that, in response to a request made by this committee during the review of the 2018-2019 Business Plans, the Minister of Finance has made a commitment to increase funding for the NWT Arts Council by $200,000 in the 2018-2019 fiscal year.
Mr. Speaker, I now pass over next section to my honourable colleague, Mr. R.J. Simpson.
Masi. Member for Hay River North.
Thank you, Mr. Speaker.
The definition of "recreation"
The committee shares the disappointment expressed by witnesses that Minister Cochrane demonstrated such unequivocal opposition to allowing representatives of the arts community to engage in this exercise. The committee holds the view that there is little harm in mutually respectful dialogue and that the input of representatives outside of the sport organizations may bring fresh views as to what the notion of recreation encompasses.
The committee considered the merits of including a definition of recreation in the bill, but considered that, given the long shelf life of legislation, this might have the inadvertent outcome of preventing the future funding of recreation activities not yet considered or imagined.
The committee notes that "A Framework for Recreation in Canada 2015 – Pathways to Wellbeing" offers the following nationally accepted definition of recreation:
Recreation is the experience that results from freely chosen participation in physical, social, intellectual, creative and spiritual pursuits that enhance individual and community wellbeing.
Noting that establishing a clear definition of "recreation" would help people identify their eligibility for accessing lottery funding, the committee makes the following recommendation:
Recommendation 1
The Standing Committee on Government Operations recommends that the Minister of Municipal and Community Affairs develop a funding policy which provides clear guidance as to funding eligibility requirements to guide the disbursement of lottery funding under the new Western Canada Lottery Act.
No erosion of sports funding – multisport games funding
Committee understands that the delivery of sport and recreation programming in the Northwest Territories depends on the commitment of volunteers and upon the funding provided by the GNWT and by non-government organizations and private businesses that sponsor sport and recreation activities.
For this reason, the committee is concerned that the inclusion of multisport games funding, under subclause 6(1)(e) of the bill, will result in the reduction of multisport game funding currently provided by the department's budget appropriation as voted in the Legislative Assembly. The committee's concern is borne out by the 2018-2019 Main Estimates for the Department of Municipal and Community Affairs, which show a reduction in the department's appropriation for multisport funding from $650,000 in 2016-2017 to $250,000 in 2018-2019.
The committee feels strongly that the bill should be amended by deleting subclause 6(1)(e), thereby deleting multisport games as being automatically eligible for funding from Western Canada Lottery proceeds. To this end, the committee proposed a motion to amend the bill to delete subclause 6(1)(e) of the bill.
The purpose of the proposed amendment is to signal that multisport activities will be funded, first and foremost, from the department's budget. This would not prevent the Minister from exercising the authority to supplement such funding with disbursements from the fund in appropriate circumstances.
The need for greater transparency – annual reporting on the fund
During the public hearing, the committee heard, from representatives of the sport and recreation community and others, that they wish to see more detailed reporting on the administration of the Physical Activity, Sport and Recreation Fund. The committee agrees that transparency and accountability are important, so that the public may see how lottery proceeds are disbursed from the fund.
In response to questions raised by the committee during the public hearing on Bill 1, the committee was advised of the department's view that the Financial Administration Act (FAA) together with the GNWT's Planning and Accountability Framework provide the requirement for sufficient public reporting on the proposed fund. The committee is not satisfied with this response.
Part 7 of the FAA governs special purpose funds. While section 104 requires year-end reporting for revolving funds, there is no similar requirement for year-end reporting for special purpose funds which, like the proposed Physical Activity, Sport and Recreation Fund, are not revolving funds.
The GNWT's Planning and Accountability Framework imposes certain accountabilities on Category A public agencies, such as the Liquor Commission, the Human Rights Commission, and the Legal Aid Commission. Bill 1 does not propose to amend the FAA to include the proposed Northwest Territories Lottery Commission in Schedule A; therefore, the committee surmises that it cannot rely on this part of the Planning and Accountability Framework to ensure adequate public reporting on the proposed fund.
While the Planning and Accountability Framework does impose certain accountability obligations on government departments (Category D), the required reporting (i.e., business plans, operating budget, and annual report) is at a high level. The committee seeks a greater level of detail than is required under the framework.
Accordingly, the committee proposed a motion to add subclause 5(5) to the bill. This proposed amendment requires the Minister to table a report in the Legislative Assembly on an annual basis, within 90 days following the end of each fiscal year, with the following details:
The total amount paid into the fund in the preceding fiscal year;
The recipient and amount of each disbursement from the fund;
A description of the purpose for which each disbursement was made from the fund; and
The value of the fund at the close of the preceding fiscal year.
Ministerial authority to accumulate a surplus or deficit in the Physical Activity, Sport and Recreation Fund
The committee shares the concern raised in submissions about the Minister's power under subsection 6(2) of Bill 1 to accumulate a deficit or surplus in the Physical Activity, Sport and Recreation Fund and wishes to ensure that reasonable limits are placed on this power.
When considering how best to amend the bill to address this matter, the committee sought and received additional information from Minister Cochrane. This exchange included a proposal from Minister Cochrane, developed in consultation with the Department of Finance, that the Department of Municipal and Community Affairs will make a submission to the Financial Management Board requesting that the FMB establish a limit on any accumulated deficit or surplus in the fund.
The committee agrees with this approach, provided that the limit set by the FMB is made public and shared with the standing committee and reported on annually by the department, in accordance with the amendment proposed with respect to year-end reporting. Accordingly, the committee makes the following recommendation:
Recommendation 2
The Standing Committee on Government Operations recommends that the Minister of Municipal and Community Affairs make a submission to the Financial Management Board requesting that the Financial Management Board establish a limit on any accumulated deficit or surplus in the Physical Activity, Sport and Recreation Fund and, furthermore, that this limit be made public, shared with the Standing Committee, and reported upon annually by the Department in its year-end reporting on the fund.
I would now like to pass the report on to the honourable Member for Nunakput. Thank you.
Masi. Member for Nunakput.
Thank you, Mr. Speaker.
Clause-by-Clause Review of the Bill
The clause-by-clause review of the bill was held on February 26, 2018. At this review, the committee moved the following motions:
That Bill 1 be amended by adding the following after subclause 5(4):
(5) The Minister shall, within 90 days following the end of each fiscal year, table a report of the fund with the Legislative Assembly, which includes
the total amount paid into the fund in the preceding fiscal year;
details of each disbursement from the fund, including the recipient, the amount paid and a description of the purpose for the disbursement; and
the value of the fund at the end of the preceding fiscal year.
Minister Cochrane concurred with this motion, and the motion was carried.
Minister Cochrane concurred with this motion, and the motion was carried.
That Bill 1 Be Amended By Inserting The Following Heading Immediately Before Clause 8: LIABILITY. This is a routine, non-substantive amendment intended to fix a drafting oversight.
Masi. Member for Kam Lake.
Thank you, Mr. Speaker.
Conclusion
The Standing Committee on Government Operations' Review of Bill 1 is the result of a collaborative process. The standing committee wishes to thank the Minister for her concurrence with the motions made by the committee to amend the bill. The committee thanks the public for their participation in the review process and everyone involved in the review of this bill for their assistance and input.
Following the clause-by-clause review, a motion was carried to report Bill 1, Western Canada Lottery Act, as amended and reprinted, as ready for consideration in Committee of the Whole.
This concludes the standing committee's review.
