Thank you, Mr. Speaker. Your Standing Committee of Economic Development and Environment is pleased to provide the "Report on Long-Term Post-Pandemic Recovery: Recommendations to the GNWT" and commends it to the House.
Thank you, Member for Nunakput. Please proceed.
Thank you, Mr. Speaker. Uncertainty of the global pandemic -- sorry, Mr. Speaker, one page ahead of myself.
The Standing Committee on Economic Development and Environment (SCEDE) has witnessed the acute and severe decline in the NWT's private sector from COVID-19. The decline in business activity continues to affect NWT businesses today. While the path through the pandemic may be short term, for some businesses and others it will take much longer to recover.
Businesses across the NWT were ordered to reduce or completely shut down their operations. A handful of businesses were able to innovate and provide altered services to remain open. Many small and medium businesses, however, have quickly depleted their financial reserves and are struggling to survive.
Total employment in the NWT fell by 400 persons in April, while the employment rate dropped to 62.3, the lowest for that month in the past 10 years. Compared to last year at the same time, unemployment rates rose among major worker groups, the highest among those who live outside the territory or outside the capital of Yellowknife are female, aged from 25 and older.
The NWT economy relies heavily on the extractive, non-renewable resource sector, especially the diamond mining industry, representing 21 percent of the overall economy. Although mining, oil, and gas have declined drastically since 2007, it still remains the NWT's most dominant economic sector. Next to mining, oil, and gas, the services industry comprises the vast majority of the remaining economy, at 68 percent, and is dominated by public administration at 32 percent.
The private sector, which is narrowly comprised of non-renewable exports, is volatile as it is subject to global commodity prices. The NWT has witnessed Dominion Diamond Mines ULC, the controlling owner of Ekati Diamond Mine and 40 percent owner of Diavik Diamond Mine, suspend operations at the Ekati mine site and file for a creditor protection order, leaving over $13 million hung up in unpaid expenses to NWT businesses during COVID-19. The NWT resource sector support services, arguably the most important economic linkage in the NWT economy, continues to wait out the uncertainty of the global pandemic as diamonds remain volatile, which furthers the NWT's private sector uncertainty at this time.
The GNWT is heavily reliant on federal financial support as its primary revenue source, accounting for slightly more than 80 percent of the GNWT's total revenues of $2.186 billion. While the GNWT's total operational expenditures, pre-pandemic, is estimated at $1.983 billion, the GNWT can largely run on federal government transfer alone. Government administration can act as a stabilizing force to the NWT economy through this recession. The NWT economy will remain much more stable through the recovery of COVID-19 than other Canadian jurisdictions dependent on private sector activity to fund government services. The medium- and long-term outlook for the NWT was concerning before COVID-19 and is even more concerning now, as we emerge out of this, post-pandemic. The NWT economy is stable but stagnant.
Due to the NWT's small population, there are limitations for the GNWT to increase own-source revenues. Since 2015, during the construction of the Gahcho Kue diamond mine, private investment has trended downward, while public investment has trended upward.
The government walks a fine balance of moving forward with large public infrastructure projects that reduce the cost of living for residents and make the NWT more attractive for investment, while minimizing borrowing debt and stimulating local business development.
The GNWT across all departments needs to train and instill client-service skills that support and promote small businesses across the NWT. The value of well-trained front line GNWT staff knowledgeable and familiar with the potential capabilities of NWT businesses cannot be underestimated at this time in our economic recession.
Small businesses need to risk start-up and be supported through small government contracts over time to enable a diversified and healthy private sector that contributes to the GNWT's own-source revenue through tax regimes. The larger businesses are pillars of the economy and need to be engaged and supported to expand into larger territorial, domestic, and even international markets.
Although the GNWT may be in a healthy credit position today, the long-term plan for the economy has to increase own-source revenues through the acceleration of a vibrant private sector in order to maintain a positive credit rating.
Mr. Speaker, I pass on to the MLA for Deh Cho. Thank you.
Thank you, Member for Nunakput. Member for Deh Cho.
Mahsi, Mr. Speaker.
Committee recognizes the swift action of the NWT Business Development Investment Corporation (BDIC) to implement two new support programs in response to COVID-19.
Committee had concerns that the loan programs available to businesses are not sufficient without being guaranteed or forgiven by the government. Businesses in the NWT incur high operating costs and in many cases have already have taken on loans or debts and cannot further extend themselves to take on additional loans through COVID-19 without any certainty for when their businesses might recover. Many businesses do not have the equity or liquidity to be sure they can pay back the loan.
Until Canada withstands the potential second and third wave of COVID-19 and the NWT lifts all public health orders, many businesses in the NWT will be under extreme pressure. BDIC programs delivered in response to COVID-19 should extend support measures until the economy recovers.
Further, committee is concerned the application process may be too onerous for small businesses. As such, the Standing Committee on Economic Development and Environment encourages the government to: simplify and shorten the application process; provide loan forgiveness options; flexible repayment options; as well as deferral payment options (without accumulating interest) for businesses until the economic depression caused by the public health crisis has subsided.
Additionally, committee wants to see the BDIC prioritize developmental lending opportunities in small communities. Programs such as the Venture Investment Program hold great potential to expand the private sector by providing equity investment into businesses. Equity investment opportunities should be pursued and actively promoted by the BDIC especially at this time.
SCEDE recommends that the GNWT, through amendment of BDIC programs, increase business relief efforts through measures not limited to extending loan payment remission and providing loan forgiveness options. SCEDE also recommends the BDIC expand investment programs to stimulate economic development. SCEDE recommends the amendments to the loan program, and a plan to expand the investment program be completed and reported back to committee as per Recommendation 5.
Mr. Speaker, I pass this on to the MLA for Yellowknife North. Mahsi.
Thank you, Member for Deh Cho. Member for Yellowknife North.
Thank you, Mr. Speaker. I would like to speak to revising the Business Incentive Policy.
The GNWT spends over $260 million annually on products and services. The GNWT alone can be a primary driver of economic recovery in the NWT through purchasing power. The purpose of the Business Incentive Policy is to give preference to businesses that are owned and operated within the NWT. It is designed to promote economic growth and capacity within NWT businesses and the economy. Yet Members hear from constituents territory-wide of the challenges accessing government procurement opportunities.
Members have heard of the success stories in other circumpolar regions that level the playing field for small businesses competing for government contracts. Small business agencies provide financial and contractual assistance, as well as business development advice.
Committee is urging the GNWT to implement more forward-thinking policies and services that more effectively support and develop capacity among NWT businesses to compete for government contracts. Specifically, increasing client services and support to compete for GNWT contracting opportunities beyond the anticipated workshops and online one-stop-shop would be valuable.
50.7 percent of the total population is Indigenous, and yet there is no specific policy in the NWT that supports the development of Indigenous businesses. At the national level, and across the country, governments have established Indigenous business policies and strategies, with incentives such as advance communication, set-asides, and sole-source contracts to build capacity and competitive edge within the Indigenous private sector.
Revising the GNWT Business Incentive Policy to strengthen Indigenous participation in the NWT supports the economic measures laid out under the Tlicho Agreement, the Sahtu Dene Metis Comprehensive Land Claims, the Gwich'in Comprehensive Land Claim Agreement, the Inuvialuit Final Agreement, and the NWT Metis Nation Land and Resources Agreement-in-Principle.
Specifically, the committee is recommending the GNWT:
review and revise criteria for eligibility under Schedule 3: Majority Non-Resident Owned Businesses (grandfathered businesses);
revise eligibility requirements to include NWT labour force requirements;
revise the 'lowest bidder' evaluation process to provide weight to other aspects of the bid, such as NWT and Indigenous labour development;
review bid adjustment percentages for contracts over $1,000,000; and
expand provisions for monitoring and compliance of BIP companies.
In addition to the revisions of policy, the GNWT needs to improve interdepartmental awareness, training, and procedures that enable large contracts to be broken down to sizes where NWT businesses can successfully compete. GNWT staff must understand NWT business capabilities better. Processes need to be established to ensure staff persons are seeking out, engaging, and working collaboratively with NWT businesses, especially Indigenous businesses, in all competitive processes.
The committee further recommends that the GNWT increase awareness of tools that can be used in procurement to encourage northern manufacturing. Committee notes the proactive actions from government to communicate with, support, and promote manufacturers of COVID-19 related supplies and would like to see this continue and be expanded upon.
Committee recognizes the commitment under the mandate to strengthen procurement policies and practices and improving participation in the Business Incentive Policy by NWT companies. Committee is recommending tangible action on this in a shorter term. Committee stresses the urgency to have an amended Business Incentive Policy integrated into government services as soon as possible.
A key pillar of the NWT economy is the private sector. The business decisions of the GNWT will directly impact the ability of businesses to grow, expand, diversify, and innovate. Building capacity and encouraging innovation within the private sector needs to be top priority for all contracts and business opportunities by all GNWT departments. The effective participation of the private sector is not only integral to community resilience but has been demonstrated to greatly assist in the recovery phases of a crisis.
SCEDE recommends the GNWT review and revise the Business Incentive Policy in collaboration with the business community as well as Members of the Legislative Assembly. SCEDE recommends this work commence immediately, and notwithstanding Recommendation 5, report to committee on the status of work by September 1, 2020, including a comprehensive work plan and a projected implementation date for the updated Business Incentive Policy.
Mr. Speaker, I would ask the MLA for Thebacha to read the report next. Thank you, Mr. Speaker.
Thank you, Member for Yellowknife North. Member for Thebacha.
Thank you, Mr. Speaker.
Strategic investments in energy infrastructure will contribute to higher standards of living for Northerners, lower the territory's high-energy costs, and improve private-sector business cases for future investments. Investing in infrastructure today sets up tomorrow's economic growth.
Moving forward through COVID-19, the need to be resilient and self-sufficient is increasingly apparent to all NWT residents. Sustainable energy (for residents, business, and industry) is a priority item for committee.
The Energy Action Plan 2019-2022 has identified the expansion of transmission line development to Fort Providence and Whati. Longer term goals include: hydropower expansion; connecting the transmission line south to the North American electrical grid; as well as north to potential future mining projects. The total capital investment required for this project is over $1 billion.
The committee recognizes Indigenous ownership in this project is critical and acknowledges the federal funding provided in 2019 to support Indigenous engagement of the Taltson Hydro Expansion project. Committee would like to know the results of this funding. Committee also acknowledges the mandate of the GNWT to establish collaborative partnerships with Indigenous governments for the Taltson Hydro Expansion Project.
The committee is additionally concerned of the capacity for northern businesses to maximize benefits in the construction phase. The GNWT can engage stakeholders and work interdepartmentally to lead efforts that advance NWT business capacity for the purposes of maximizing northern benefits from the construction, operations, and maintenance phases.
Committee also recognizes the GNWT is making efforts to modernize GNWT procurement to reflect best practices, and notes that these practices should be formalized prior to future construction of major projects.
SCEDE recommends the GNWT work with Indigenous stakeholders and define the Indigenous ownership of the Taltson Hydro Expansion. Committee further recommends the GNWT lead interdepartmental efforts with project stakeholders to develop a plan that builds capacity among northern businesses to maximize benefits from the construction of this project.
The next to come up is the MLA for Frame Lake. Thank you, Mr. Speaker.
Thank you, Member for Thebacha. Member for Frame Lake.
Merci, Monsieur le President. In today's digital world, the Internet is integrated into every aspect of our lives, and we increasingly rely upon it for ever-expanding uses, including social, recreational, educational, health, employment, financial, business, and innovation opportunities. While all communities in the NWT have access to the Internet, the northern part of the territory is still largely connected on outdated, slow, intermittent infrastructure. The southern part of the territory, while connected to the fibre link, lacks redundancy and is subject to outages.
While the Mackenzie Valley Fibre Link Project has been completed, the distribution system in northern communities is still lacking and the residents remain disconnected from the benefits of high-speed Internet access. The user price for northern communication services remains the highest in the country.
Furthermore, 20.3 percent of NWT households do not have Internet access. When looking at households without Internet connection across the territory, the regions with lowest access are the Tlicho and Dehcho, at nearly half of households not connected, followed by the Sahtu and Beaufort-Delta, at 30 percent not connected. Most major highways in the NWT have intermittent cellular service at best. COVID-19 has highlighted the critical importance of ensuring all NWT residents have consistent, reliable, and faster access to information from their homes.
Canada's Connectivity Strategy features two main objectives: that all Canadian have access to broadband at speeds of at least 50 Mbps download and 10Mbps upload; and that mobile wireless services coverage is available where Canadians live and work, and along major road corridors.
Included in the new Universal Broadband fund, the Government of Canada will look to secure advanced, new low-latency Low Earth Orbit Satellite capacity. A process was launched in the spring of 2019 to bring reliable high-speed Internet access to even the most challenging-to-reach rural and remote homes and communities in Canada.
Northwestel's vision aligns with Canada's to bring 50/10Mbps Internet with unlimited data options to every community in the NWT. The company has submitted an application to Canadian Radio-television and Telecommunications Commission to invest in Fiber-to-the-Home and LEO satellites to deliver on these objectives.
Improving the Internet connection in the NWT must be done in collaboration with industry, and supported through GNWT and Government of Canada investments. Committee acknowledges the GNWT mandate to advance work to support fast and reliable broadband Internet services in all NWT communities and would like to see this work prioritized in response to COVID-19. In support of the efforts to secure funding and produce community business cases, committee is looking for initial costed plans for the development of community distribution systems off the Mackenzie Valley Fiber Link, as well as LEO satellites to the most remote communities.
SCEDE recommends the GNWT complete a costed plan to provide broadband Internet connectivity across the territory comparable to the rest of Canada. In addition to the financial costs of extending broadband distribution into all communities, the plan should identify ownership model options, such as public, private, or partnership, for the delivery of broadband services. Notwithstanding Recommendation 5, committee recommends the costed plan be provided to committee by September 1, 2020.
Mr. Speaker, I'd like to turn the final part of the report over to the chair of the committee, the honourable Member for Nunakput. Mahsi, Mr. Speaker.
Thank you, Member for Frame Lake. Member for Nunakput.
Thank you, Mr. Speaker.
The Standing Committee on Economic Development and Environment recommends the Government provide a response to the recommendations contained in this report within 120 days. Thank you, Mr. Speaker.
Thank you, Member for Nunakput. Reports of standing and special committees. Member for Thebacha.
