EdinburghNLP/nunavut-hansard-plusplus huggingface dataset:
The standing committee notes that the proposed budget of $52,197,000 is almost 90 percent higher than the department’s initial budget of $27,548,000 in 1999-2000.
The department’s budget has increased by just over four percent from the 2006-07 main estimates.
The department has budgeted for 181 PYs in 2007-08, which is five fewer than in last year’s main estimates. 154 positions were allocated for the department in its 2004-05 main estimates.
Members recognize the role that the department plays as a central agency. One of the key functions that the department performs is supporting the Financial Management Board’s coordination of the government’s budget development process through the preparation of the annual main estimates, capital estimates and public accounts.
Mr. Chairman, one issue with GN-wide implications that I would like to comment on today concerns the growth in the size of the public service since the creation of Nunavut in 1999.
According to the GN’s own departmental business plans for the 2004-05 fiscal year, the total number of PYs across the government was approximately 3,040, not including the Qulliq Energy Corporation’s positions.
The number of PYs for 2007-08 is approximately 3,438. This is an increase of almost 400 positions, or 13 percent, in just three fiscal years.
The standing committee does recognize that the rate of growth across the government has slowed in the last year, with a net increase of 25 PYs over the 2006-07 main estimates.
This growth is taking place even though the government’s overall vacancy rate is still around the 20 percent level.
Although the GN’s most recently-tabled employment statistics reveal that over 730 positions are vacant, departments are continuing to add new PYs to their organizational charts.
The Standing Committee has been advised that the Financial Management Board has approved a new PY control mechanism to ensure that all PYs listed in departmental structures are fully funded.
We must recognize that the bureaucracy cannot grow forever.
The GN has budgeted to spend over $300 million in 2007-08 on compensation and benefits for employees, an amount which accounts for over 30 percent of total government spending.
While it is important to compensate our hard-working staff in a manner that supports our recruitment and retention goals, we also need to recognize that dollars spent on compensation and benefits for new employees are dollars that are not available for other spending priorities, such as capital projects in communities, or increased financial assistance for young Nunavummiut to attend university or pursue other post-secondary qualifications.
The standing committee has consistently called on the department to enhance the transparency and accountability of government operations through such measures as ensuring that the government’s financial statements are tabled within the timelines established by law, and expanding the level of detail contained in financial documents.
There has been progress in this area. For example, in June of 2006, the Minister of Finance tabled a comprehensive GN-wide report on grants and contributions made during the 2004-05 fiscal year.
The standing committee looks forward to the timely tabling of these reports for subsequent fiscal years.
The committee also looks forward to the tabling of the government’s 2005-06 public accounts.
The standing committee is pleased to note that the government’s 2007-08 main estimates and business plans include significantly more detail with respect to the planned budgets and priorities of Crown agencies, with the exceptions of the Nunavut Business Credit Corporation and the Qulliq Energy Corporation.
Mr. Chairman, one of the goals agreed to by all MLAs at our Arviat Caucus Retreat was to manage Nunavut’s resources responsibly by acting decisively on the recommendations of the Auditor General and Legislative Assembly Standing Committees with respect to strengthened financial management across government departments and Crown agencies.
Members will continue to closely scrutinize progress towards this commitment, and look forward to holding public hearings on this year’s reports of the Auditor General.
The Department of Finance is responsible for administering the government’s new Fuel Tax Rebate Program.
The standing committee looks forward to the tabling of the first annual report on the program, which will enable all members to begin to evaluate the success of the program in achieving its objectives. The committee has also noted the government’s recent response to a petition concerning the initiative, which indicated that further modifications to the program may be made.
The standing committee also urges the government to measure the success that the recently-approved Tobacco Tax increase actually has on reducing tobacco consumption in the territory.
The standing committee also looks forward to progress being made with respect to the issue of ensuring that the GN is able to capture Payroll Tax revenue from consultants and contractors who receive payment from the GN for their services.
The standing committee has noted that the GN has brought forward a new bulk refined petroleum products risk management strategy.
This strategy will allow the government to use financial hedging instruments in its approach to purchasing fuel.
Although this strategy does have the potential to reduce the price that we pay for fuel, it is not without a degree of risk.
It is critical that the government be candid with Nunavummiut on this point, you just have to look at Air Canada.
The committee is pleased that the GN has begun the practice of tabling an annual report on its leasing activities.
The committee also looks forward to the department making progress on developing a formal policy for the use of Public-Private Partnerships.
Mr. Chairman, the issue of Crown corporation governance is important. Members were pleased to note that the second annual activities report of the GN’s Crown Agency Council was recently tabled in the Legislative Assembly, in addition to ministerial letters of expectation to Nunavut’s Crown agencies, and the Crowns’ responses to those letters.
The standing committee will continue to monitor progress in this area, including such issues as the QEC’s compliance with the direction given in respect to such matters as staff housing.
The issue of budget adjustments and transfers is of concern to members.
When the government changes the scope or timing of previously-approved capital projects during the course of a fiscal year, members whose communities are impacted expect that they and local community leaders will be consulted and kept informed in a timely manner.
And I believe we just got a letter in that regard from the Minister so it’s good to see some movement in that area.
It is important that the government adhere fully to section 4.3 of the GN’s Financial Administration Manual.
This section deals with the issue of consultation guidelines for capital project budget adjustments. The section specifies that, “each quarter, the Chairman of the Financial Administration Board will provide the Standing Committee on Government Operations with a report, by department, that identifies all capital adjustments made in that quarter.”
Members note that the department is planning to undertake a comprehensive review of the Liquor Act at a future point in time.
The issue of access to liquor is a contentious one, and members recognize that different communities have different views on the extent to which access should be permitted.
That concludes my opening comments. I am sure other individual members have comments they would like to raise on their own, too, and questions and I look forward to that as we proceed.
According to Rule 77(1), you have 10 minutes to speak, and according to Rule 77(2), subject to the discretion of the Chair a member may speak more than once to a matter under discussion but not until every member wishing to speak has spoken.
I suggest to members that wherever possible you ask your detailed questions during the page-by-page review of the department total estimates.
Do member have general comments.
There being none. I have no names for general comments.
We will now proceed to page by page review of this departmental estimates starting with page C-5.
In 2006-07 there was $2,245,000 that was introduced which was not … the supplementary that was set in order to accommodate the concerns that were raised by the Auditor General in accordance with her report to the Legislative Assembly, what has the department spent and have they made any improvements financially?
Hon. David Simailak (interpretation): I’ll let Mr. Ma respond to that.
Mr. Ma.
Mr. Ma: Thank you, Mr. Chairman.
A couple of financial management initiatives were undertaken as the minister stated this year. A number of the projects that we have started include what we call the Nunavut Financial Information System Review. That review is basically looking at what we have in place right now for financial systems.
We have a contractor in place and we expect to have that review done sometime late next month.
A second initiative that we have undertaken this year is the Human Resource Strategy for Finance.
A contract was recently issued, I believe in January, and that work is now progressing. That work would look at things that were talked about in the House. A possible option is something similar to the law student program: the Akitsiraq Program.
We have in that particular survey asked other jurisdictions for their input as well. I believe at this point we have received six responses back. Other things that we have worked on are funding authorities and we are working on that particular part of it.
What else have we done this year?
We have looked at strengthening public accounts. We are studying different ways to increase the speed of getting the public accounts done and I believe the Chairperson of the Standing Committee mentioned that in his opening comments. So those are some examples of some of the things that we have done this past year.
Chairman: Thank you, Mr. Ma. Mr. Barnabas.
The Auditor General’s last report to the Legislative Assembly which was tabled almost a year ago recommended the Government of Nunavut recentralize certain accounting functions in order to address weaknesses in the government’s financial management.
The Government of Nunavut business plan indicated that the government is still reviewing this issue. When will the government take decisions in this area and what position do you support?
We are currently working on this with the Department of Health and EIA so we can learn more.
They’re in Iqaluit. There are some in Iqaluit and Rankin Inlet. We will be using this to train more.
Mr. Barnabas (interpretation): Thank you, Mr. Chairman. When will the Nunavut Government 2005-06 Public Accounts be tabled in the Legislative Assembly?
Maybe in the spring session in May we would be able to table that.
Mr. Barnabas (interpretation): The 2007-08 Business Plan states the priorities for the New Year.
The Nunavut Government, through its reporting system should be able to report so that the reports will come out on time. They should be audited and un-audited financial statements. So I urge that the Public Accounts be introduced by December 31, or earlier.
Will they be implementing the priorities that they have stated in their plans? The way the consolidated financial statements are made.
Hon. David Simailak (interpretation): Thank you, Mr. Chairman. We have positions that are not filled with the accountants in our department, and other departments.
We are constantly looking for people to fill those positions. We have also asked for input from different jurisdictions so we are informed as to what they are doing. We are constantly trying to fill those positions to make improvements and we have no doubt.
In the same page it is talking about PYs. The number of PYs in your department is being reduced from 186 in 2006-07 to 181 in 2007-08. Why is this department doing this?
Peter Ma will respond to that.
In preparing the 2007-08 budget, in order to make our target, we froze nine positions. So that’s why there is a decrease in those positions for this coming year.
Mr. Barnabas: Thank you, Mr. Chairman. 32 of your department’s vacant positions are located in Iqaluit.
What challenges exist with respect to filling these positions?
Mr. Ma: Thank you, Mr. Chairman. I think all members know that one of the biggest challenges that we have is compensation. That’s why we’re doing the HR Strategy.
As I indicated earlier, we have asked other jurisdictions for their input. One of the things that we’re doing in the HR Strategy is a salary review.
Obviously, the migration of workers from eastern Canada to western Canada has impacted our ability to recruit and retain people. We know from experience in the past year that we’ve made offers but we just can’t compete with other jurisdictions. It’s not just us.
We know from statistics from the Office of the Auditor General that they’re having the same problem as well. Thank you, Mr. Chairman.
On the same page, C-5, the GN has recently issued requests for proposals for banking services.
At present, the Royal Bank of Canada is the GN’s principal banker.
Could the GN use this RFP as an opportunity to encourage banks to expand their services to the smaller communities?
That’s one of the questions that we posed to the bank: how the smaller communities can be assisted with banking institutions.
They will be responding on how they will deal with this. I haven’t personally seen it. Hopefully, we’ll be seeing it soon.
On the PPD issue, the GN’s new Fuel Hedging Policy is available on the government’s website.
When do you anticipate the necessary regulations being passed by Cabinet so that the policy can be used for the 2007 re-supply?
The legal people and the guidelines that have been produced, the Cabinet will review it and maybe approve it.
We should have been using that route before.
Just recently in the news we heard that the big companies, especially Air Canada, used hedging.
According to the price of the fuel, what are the risks if the government goes ahead with the plan?
Certainly there is risk in any sort of hedging strategy. However, given the impact of fuel prices in the last few years for this government we do need to implement something to reduce the cost of fuel for this territory. There is no question that hedging has some risks.
It’s how you control that risk.
We intend to use experienced people in this field for their advice. We certainly all know about Air Canada, Amranth and other hedge funders that have gone under. It’s how you decide to hedge, a lot would depend on your strategy.
So for example, let’s say we do 100 litres of fuel in a year.
We may not hedge the full 100 litres; we may only hedge 75 percent of that. We would pick certain points in time where we buy a certain quantity. Our hedging charge would expire at a certain point in time, so you spread your risk.
How you hedge is how you manage your risk so to speak.
This will be my last question. (interpretation ends)
The Government of Nunavut’s new investment guidelines were tabled in the House in December 2006.
If the Government of Nunavut is successful in negotiating a new territorial formula financing agreement with Ottawa will the Government of Nunavut still be allowed to keep its surplus cash and invest it or will the money be clawed back.
What is the federal government’s position on this issue in TFF negotiations with Nunavut?
Hon. David Simailak (interpretation): Thank you, Mr. Chairman. Well, we haven’t seen exactly how it’s going to be organized in the new agreement.
But once we see it, we will be able to respond to your question.
We’re on C-5.
Along similar lines, maybe a little bit different, I asked a question to the Minister responsible for petroleum products services division about what happens if the fuel tank is not empty at the end of the year.
For example three quarters or one quarter left in the tank. And when you buy new fuel, like last year with the fuel prices going up by ten cents, when you refuel that tank and you have to raise the prices since October 1 last year, do you include the old fuel and its price to the new fuel price of that time?
Chairman (interpretation): Thank you Mr. Arvaluk. (interpretation ends) I’m not sure if the Minister has a witness at the table responsible for that, but if you want to direct the question to another minister.
Hon. David Simailak (interpretation): I think we can respond to some degree if it’s okay with the minister responsible for petroleum products.
When we buy oil products, for example, we bought it in the summer and we didn’t know till the fall that there was going to be an increase.
If there’s a surplus, we usually put the price of both the old and the new together.
Mr. Arvaluk (interpretation): Thank you, very much, Mr. Chairman.
Well, we knew there was a significant increase last year and the government had to step in, and put in a subsidy of about ten cents a litre, but then again, there was a surplus in some of the tanks in some of the communities.
If we use an example of 80 cents last year and then if it became a dollar this year, would you have them pay 90 cents, or would you follow the proportion of the old and the new?
Chairman: Thank you, Mr. Arvaluk, Minister Simailak.
Hon. David Simailak (interpretation): Thank you, Mr. Chairman. Minister Picco would like to respond to that.
Just very quickly, when … and the member is alluding to the pricing component of the fuel. The pricing component of the fuel is a blended cost that we have which includes the actual shipping cost and the purchase price. The member is talking about the fuel that is left over in the tank; the residual fuel in the tank.
Every community is different. In one community there may be ten percent residual fuels in another community there may be 30 percent residual fuel.
But the total cost of buying that fuel for that one year period, if it is $30 million, it has to be recovered. And that recovery comes from the fuel price that is set. We call that the Petroleum Products Revolving Fund and we have of course legislation around that.
So hopefully that helps to answer the member’s question. When you have that amount of surplus in any given tank then that is actually factored into the blended cost that we just talked about.
Finance. Directorate.
Welcome to the minister and his officials to Committee of the Whole.
On March 20, the minister made a Ministerial Statement regarding the Territorial Formula Financing Agreement that was announced on March 19.
But in his Minister’s Statement he said that by and large the O’Brien Report recommendations were contained in Monday’s budget. During Question Period on March 20, I asked the minister which recommendations were not contained in the Monday’s budget from the O’Brien Report and why not.
The minister has an opportunity today with his officials present; if he could tell us which recommendations were not included in the federal budget.
I remarked that most of the recommendations seemed to be in the new budget but we haven’t received anything from the federal Finance yet so it is still hard to speculate on what was in there and what was not included.
We’re still waiting for information from federal Finance.
The minister said that by and large, most recommendations were included.
So it seemed to indicate to me that you have a pretty good idea what wasn’t included.
So can the minister tell us which recommendations, if they were not included, would have a negative impact on our territory?
I will still prefer to wait until we receive the necessary information from Ottawa and once our staff has had a chance to digest it all and then start to get into those sorts of discussions.
That is not what I wanted to hear. I have a copy of the Ministerial Statement and the minister mentioned: a base, or floor amount of funding based on Nunavut’s needs; a yearly increase that is cost-based, and not simply a set percentage increase; a simplified approach to the measurement of territorial revenues; improved incentives for us to increase our own revenues and to develop our economy; simplified payment systems to increase predictability.
To me that sounds like a summary of information that you, as the Minister of Finance and the Department of Finance has probably been briefed by the federal government Department of Finance about what is and is not in the budget that is going to be beneficial to Nunavut.
So again, I would ask the minister if he could shed some light on the recommendations that weren’t contained in the Monday’s budget.
The TFF formula is very complex between the different parts that lead into the final calculation. Once we have all of the necessary information from Ottawa, I would be pleased to offer members a TFF primer if you want to call it, if you were so interested, but I would prefer to wait until our department has had a chance to digest the information that we are still waiting for from Ottawa actually on the actual details of the copy of the federal budget itself.
I can sympathize with the minister why he wants to take time to review the TFF because I have a copy here from 2001-02 to 2002-03, 2003-04 and I substituted all of the formulas and it’s amazing, I don’t know how the federal and territorial governments calculate the funds that we’re supposed to get and receive up here. I think I’ll take the minister up on the TFF primer.
I hope it’s not as thick as this because it makes me feel like I’ll have to go back to math class because there are formulas in here that I think they need Ph.D. to figure out and a couple big computers. So when I read your Minister’s Statement on a simplified approach to the measurement of territorial revenue I’m hopeful that that’s what it really is, simplified. We certainly need some simple agreements here so we can understand where we are at and where we are going.
Perhaps the minister, he did say in his statement that improved incentives for us to increase our own revenues and develop our economy. I’m sure that the minister has some indication of what those incentives might be. We just finished with the Department of Economic Development and Transportation, of which the minister is also minister for that department, and I mentioned that we have got to stop depending on the federal government so much for transfer payments.
So I’m wondering: can the minister outline some of these improved incentives that would allow us to increase our own revenues and develop our economies?
Peter Ma can respond to that.
I believe the minister’s reference is to something that would be in the TFF formula.
It’s called the EDI. EDI is short for Economic Developments Incentive and I don’t remember for sure but previously I think the number was something like 20 percent. In other words, part of your own source revenue gets counted into the formula so you get less revenue so there is no incentive for you to increase your own source revenue.
So we’re hoping, and we have, like the minister says, we’re waiting for confirmation from Federal Finance as to whether that percentage is changed. We are hoping that it has changed to our benefit but we have not received our confirmation. In the O’Brien Report that was one of his recommendations to provide more incentives to territories to increase their own source revenue.
Chairman: Thank you, Mr. Ma. Mr. Peterson
I thank the minister and Mr. Ma for that answer. I wonder if I could ask the minister if he would commit to spending an hour with the regular members, perhaps during the spring session, to give us a more in depth detailed overview of the TFF including his primer on the TFF, if the minister could make that commitment.
Yes, as I mentioned earlier, I would be pleased to do that during the May-June sitting.
Elsewhere in the ministerial statement the minister made a comment that any new funding should be needs based, not per capita based.
I noted in some of the summaries for the federal budget from organizations such as Federation of Canadian Municipalities that there seems to be a move back to per capita funding for the provinces and territories on some important programs.
I wonder if the minister could explain what he believes would be the implications of per capita based funding for Nunavut.