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The Honourable Joseph L. Handley
Minister of Finance
June 20, 2000
Government of the Northwest Territories

Mr. Speaker, it is with considerable optimism that I present the first Budget of the 14th Legislative Assembly, and my first as Minister of Finance. I am optimistic because these are exciting times for the people of the Northwest Territories. We are on the brink of substantial development of our Territories' immense resource potential n our diamonds, oil and gas have made us the focus of national and international attention. Our renewable resource economy, including tourism, forestry, and fur harvesting, also offers great promise.

On the political side, we have made, and are continuing to make, progress in resolving lands, resources and self-government issues. Aboriginal leaders appear confident that non-renewable resource development can be a positive force. Federal, territorial and Aboriginal governments have committed to work together on key issues such as devolution n the transfer of jurisdiction over northern resources to northern governments, including resource revenue sharing.

"Both the Northwest Territories and Canada stand to make substantial gains if we make the right investments now."

This is not to say that the challenges of unemployment, low education levels, social conditions and health concerns have been eliminated. Unfortunately, they still exist. However, if we can achieve a healthy economy and fiscally sound governments, we will be in a much better position to address these challenges.

In Towards a Better Tomorrow, Members of the 14th Assembly have laid out a vision for a prosperous future for the Northwest Territories. Members clearly recognize the great potential we hold. This government fully supports the vision laid out in Towards a Better Tomorrow. Over the next four years we hope to bring forward fiscal and economic initiatives that will put the Northwest Territories on track to realize this vision.

In order for us to achieve our potential, we must carefully assess our strengths and our weaknesses and focus on the strategies that will help us achieve our goals. These strategies must include:

However, Mr. Speaker, as I have stated in this House, along with my colleagues, the new resources we are able to commit toward this vision in this Budget are limited. Given our fiscal position, the fact that we are able to maintain the service levels we currently enjoy is an achievement worth noting. This Budget allocates resources to keep pace with the growing demands in health, education and social services. I see this Budget as just the first step for achieving our vision. During this fiscal year we must finalize our strategies and determine how they can be financed.

We recognize that we cannot do this alone. We need to work together - Cabinet and Regular Members with the federal and Aboriginal governments - to put the necessary pieces into place. For example, we will need to draw on the work of the Economic Strategy Panel. We need to encourage the deliberations of the Intergovernmental Forum on devolution and resource revenue sharing. We need to develop further our non-renewable resource development strategy to identify the investments required to maximize the benefits to northerners from development. And finally, we need to know if the federal government will participate in a meaningful way in these crucial investments in the economic future of the Northwest Territories.

I am very optimistic that northerners, working together, can achieve a prosperous future. Both the Northwest Territories and Canada stand to make substantial gains if we make the right investments now.

1999-2000 FISCAL POSITION

Mr. Speaker, I would now like to review with you our current fiscal position, based on the results of the last two fiscal years.

The 1998-1999 fiscal year concluded with the creation of Nunavut and the new Northwest Territories. Although the audit of the 1998-1999 Public Accounts is not yet final, we anticipate that the non-consolidated accumulated surplus at the end of 1998-1999 will be $38 million. This amount will be allocated between Nunavut and the new Northwest Territories in accordance with the Agreement on the Division of Assets and Liabilities entered into prior to Division. As a result, the Northwest Territories will have begun its new existence on April 1, 1999, with an estimated $21 million accumulated surplus.

Mr. Speaker, the fact that we were able to start this new era with an accumulated surplus should be recognized as a major accomplishment, and credit for this achievement should be given to the 13th Legislative Assembly. Unfortunately, our ongoing problem of low revenue growth in the face of rising costs required the last government to budget a $34 million deficit for 1999-2000. This deficit is expected to eliminate the starting accumulated surplus of $21 million and place us in a small accumulated deficit position at the end of 1999-2000.

2000-2001 FISCAL OUTLOOK

Mr. Speaker, this fiscal year the government is making a significant change in how it presents its budget and financial information. In accordance with the recommendations of the Public Sector Accounting Board, all Canadian governments are expected to report on the value and accumulated depreciation of their tangible capital assets such as schools, highways and hospitals. Up to now, the value of these assets has not been reflected in our books. In the words of the Auditor General of Canada when speaking on this matter in relation to the federal government, I quote:

"The biggest problem with the way the government has kept its books for 130 years is that it didnit give the information needed to manage assets and plan for the future. We canit delay further n weire just catching up to 20th century practices as we enter the 21st century."

The Government of the Northwest Territories is proud to be among the leading jurisdictions in the implementation of these new accounting guidelines. We firmly believe they will lead to better planning and greater transparency in government operations. We are also using this opportunity to enhance our budget presentation to include cash and debt forecasts in addition to our traditional forecasts of surpluses and deficits. We believe this additional information will provide the public with a more thorough understanding of government operations.

Mr. Speaker, because the technical aspects of these accounting changes require more explanation than I can provide in my speech, we have included, in the budget documents, a full explanation and reconciliation to former accounting practices. In addition, we are offering briefing sessions to the media and other interested groups.

The 2000-2001 Budget anticipates operating expenditures, including supplementary appropriations and lapses, of $763.6 million. Total revenues are estimated to be $751.3 million. This represents an expected operating deficit of $12.3 million. We also expect to make investments in additional tangible capital assets of $54 million during the 2000-2001 fiscal year.

When the operating deficit of $12 million and the undepreciated value of our investment in capital assets are taken into account, we expect an accumulated surplus position at the end of 2000-2001 of $843 million. Contributing to the $843 million accumulated surplus is the net book value of our capital assets at $846 million.

As Members are well aware, Mr. Speaker, we find ourselves in a deficit situation because our revenue growth has been, and is expected to continue to be, insufficient to meet the growing needs of our residents for programs and services. Having said this, we are expecting our revenues in 2000-2001 to be slightly higher than originally forecast. We are encouraged that the NWT population is growing again, after the decline experienced in 1998. However, our rate of population growth is still lower than that of Canada, and this translates into very little growth in the Formula Financing Grant. One-time federal funding of $8 million provided through the Canada Health and Social Transfer (CHST) and $5 million for prior yearsi nurses salary adjustments will help boost this yearis revenues. In addition, we will receive funding from Canada of about $13 million to compensate for the increased pension costs imposed on us by changes to the federal Public Service Superannuation Act.

We are also expecting a substantial increase in our tax revenues over last year. Even though a portion of this increase is due to one-time adjustments for previous years, we anticipate that economic activity associated with resource development will translate into a higher tax base for this government. However, under our current fiscal arrangements with Canada, the GNWT will only benefit from about 20 per cent of this increase.

On the expenditure side, the program and service needs of our residents are forecast to continue to grow more quickly than our revenues. The demands on our expenditures are driven by a number of factors:

We cannot solve our problems simply by cutting expenditures. In 1995 and 1996, faced with a unilateral $55 million federally-imposed cut to our Formula Financing Grant, the previous government of the 13th Assembly reduced spending significantly: departments were combined, wages were reduced, hundreds of staff were laid off, capital spending was cut and services were reduced. However, these cuts did not solve the fundamental problem of the growing gap between our expenditures and revenues.

If we are to act as responsible fiscal managers, it is necessary to look at our expenditures to ensure that we are getting the best value for our dollars. A number of reviews have been initiated within the government to determine if there are areas where it makes sense to reduce spending:

Finally, we are reviewing potential sources of additional revenue, including taxation.

I want to assure the public and the members of the public service that we are not looking either at wholesale cuts to programs and services or at large-scale layoffs as the solution to our fiscal situation. Making cuts to essential services will likely cost us much more in the future in terms of health and social problems.

Mr. Speaker, although major cuts to basic services are not considered wise, we must all temper our expectations of what the Northwest Territories government can afford to do. This includes our departments, our boards and agencies, our contribution recipients, our public sector unions and our program and service clients.

In Towards a Better Tomorrow the 14th Assembly has identified four key priorities for the next four years. It is on these priorities that the work and resources of this government will be focussed. We will make investments where we are able, just as the previous government made key investments in the diamond value-added sector, and in providing support to oil and gas activity, because they knew these investments would pay off.

However, our fiscal resources are limited. We know that substantial revenues will be generated from the development of our non-renewable resources. But it is only when northerners gain control over the pace of development, and receive the fiscal benefits of that development, that we will have the means to reach our goals.

 

IMPROVING SOCIAL WELLBEING

As its first priority, the 14th Legislative Assembly identified the need for our government to work with individuals, families and communities to improve the social wellbeing of NWT residents. The spending measures contained in this Budget reflect our strategies to achieve this priority. This Budget allocates $454 million, or 60 per cent of our total expenditures, to key social programs n health, education, social services, justice and housing. Despite fiscal constraints, we will maintain service levels. For example, in this Budget we propose to:

We have begun to make those strategic investments which we feel will pay large dividends in the future. Improving the social wellbeing of NWT residents begins with our youngest residents, Mr. Speaker. In many ways, the future of the Northwest Territories will depend on the measures we take today to improve and ensure the wellness of our youngest children. This is where investment will yield the greatest returns.

In recent years, we have reduced the rates of communicable diseases in children. Infant mortality and low birth weight rates have been reduced, and our children are staying in school longer.

Despite these successes, we still face many major challenges. For example, we continue to see unacceptable rates of alcohol and tobacco use during pregnancy. Our children are admitted to family violence shelters at four times the national rate. Our teen birth rate is three times the national average. If we believe our children are our future, we must do a better job of addressing these issues, not just at a government level but together at a community, family and individual level.

There is overwhelming research evidence that the years between birth and six years of age are key to future success. Investment in early childhood development pays off by reducing the likelihood that people will develop difficulties later in life. Over time, this reduces costs in the health care system, in the justice system, and in a variety of social services.

Under a federal-provincial-territorial agreement, the GNWT reinvests savings from the National Child Benefit in programs targeted at children. In 2000-2001, the Department of Education, Culture and Employment will invest an additional $210,000 under the Healthy Children Initiative, which enables children to start life as healthy as possible and to enhance their potential for full development. Through the Healthy Children Initiative, community groups can design and deliver integrated programs and services for children up to six years old.

We must, however, do more than this. I am pleased to announce that the Departments of Education, Culture and Employment and Health and Social Services will work on the development and implementation of a Territorial Agenda for children and youth. The first component of the agenda is an initiative in early childhood development, reflecting the fact that it is in the early years that the greatest impact can be made.

We have identified four key areas for investment under the Agenda:

As a sign of our commitment, later during this Session, the Honourable Jane Groenewegen, Minister of Health and Social Services, will be making a statement in support of early childhood development. This will be followed by consultations and the release of an early childhood development action plan. We will use the current fiscal year for planning and consultation. I hope that this government will be in a position to implement new initiatives in each key area in next yearis Budget.

By investing in our youngest residents, we can ensure our children begin their school years ready to learn. From there, we must ensure that quality education and training is available to students of all ages. A well-educated population will be crucial if northerners are to benefit from the economic opportunities available.

We will increase funding in 2000-2001 by $1.6 million for student support services and to reduce the pupil/teacher ratio. This amount will increase to $4.0 million next year, to $6.4 million in the following year and to $8.2 million in 2003-2004 and will bring the pupil/teacher ratio to 16:1 in 2003-2004 from its current level of 18:1.

Financial assistance to students is a vital support to promote life-long learning and career development. This year, we are enhancing the individual benefits for students to ensure that the support available better reflects the costs of post-secondary studies. Thanks to the support of all Members of the Legislative Assembly, we have obtained approval to proceed with a redesigned Student Financial Assistance Program, one that will put more money in the hands of NWT students with a particular focus on Aboriginal and long-time northerners.

We are making these investments in our residents, but there is a great need for additional investments to ensure a healthy and educated population in the Northwest Territories. We can only make investments within our means.

The needs of territorial residents require that the Government of Canada make its contribution to the cost of social programs. Unfortunately, in spite of the improvement in the federal fiscal situation, transfers for social programs continue to be subject to federal restraint measures.

In its last two budgets, the federal government has announced a partial restoration of CHST funding. This Budget has made provision for a Supplementary Reserve of $4.8 million, which represents the GNWTis share of the 1999 CHST Trust n one time federal funding which the provinces and territories have committed to allocate to health care. The Department of Health and Social Services will be coming forward with proposals for the use of this money, which will focus on the implementation of primary health care models.

Along with the provinces and other territories, the Government of the Northwest Territories has called for full restoration of the CHST to 1994-1995 levels, including the addition of an appropriate escalator to reflect growing costs.

The additional CHST funding provided to date will increase our revenues by about $4 million per year over the next four years. Full restoration of the CHST would provide the GNWT with a further $4 million per year. However, this is far less than the ongoing effect of the 1996 cut to the Formula Financing Grant.

BETTER GOVERNANCE THROUGH PARTNERSHIPS

Mr. Speaker, the second priority in Towards a Better Tomorrow is that of "Better governance through partnerships." We recognize that we cannot achieve our objectives in isolation. We need to work in partnership n federal, Aboriginal and territorial governments n to make change happen.

The building of strong partnerships between the Government of the Northwest Territories and Aboriginal governments is a priority of this government. We are working diligently to strengthen and enhance our intergovernmental relationship with Aboriginal governments.

In the Beaufort Delta region, our government and the Government of Canada have entered into a political accord with the Gwichiin Tribal Council and the Inuvialuit Regional Corporation to work together on issues of common concern. On June 13th, 2000, in Lutselk'e, the Minister of Aboriginal Affairs, the Honourable Jim Antoine, entered into a political accord on behalf of the Government with the Akaitcho Dene First Nations. This accord recognizes the growing relationship between our respective governments and the need to work closely together on issues affecting both the Akaitcho region and the territory as a whole.

At the territorial level, the Intergovernmental Forum process brings together the territorial, federal and Aboriginal governments to discuss issues that are territorial in scope. At the first Intergovernmental Forum meeting held in Hay River on May 5th, 2000, leaders agreed to work together on pipeline developments, devolution and capacity building for Aboriginal governments leading up to the next Intergovernmental Forum meeting in the fall.

This government is fully committed to building solid intergovernmental relationships through the Intergovernmental Forum. This unique governments to government to government approach will provide a process for on-going dialogue among the parties on such key issues as devolution of control over northern resources, and other shared concerns. As part of our commitment to this process, we have dedicated three full-time positions to work on this important initiative. The Government of the Northwest Territories, along with the federal government, is also committed to ensuring that Aboriginal governments have adequate resources to participate as full partners in this process. While we have not identified financial resources in this Budget to fund Aboriginal government participation in the Intergovernmental Forum, this government has made a commitment to fund one-third of these costs. Once final decisions are made on these costs, we will be asking for additional appropriations from this Legislative Assembly.

This government recognizes the inherent right of self-government of Aboriginal people in the NWT. We are working with Aboriginal people to create an environment in which this right can be realized and implemented. To this end, we are strongly committed to negotiating agreements that will achieve the Assemblyis goal of "Strong and effective Aboriginal and public governments, operating co-operatively with no reduction in program and service levels as a result of implementing self-government agreements."

 

A VIBRANT NORTHERN ECONOMY

The third priority of the 14th Assembly is "A northern-controlled economy that is balanced, diversified, stable and vibrant." We are fortunate that our economic future holds such great promise.

The prospects for mineral and petroleum development in our territory are bright. Diamond mining has become an established industry in the north, with one mine in production and planning to expand, a second in the final planning and approval stages, and a third expected to soon make application for environmental licensing.

We have weathered a severe downturn in the international gold market and are hopeful that the worst is over.

The recent increase in the North American market for natural gas has led to a renewed interest in NWT oil and gas reserves. For the first time in 25 years, the possibility of a Mackenzie Valley natural gas pipeline is a hot topic in boardrooms across the nation. In addition, NWT Aboriginal leaders have formed the Aboriginal Pipeline Group, to promote Aboriginal ownership and participation in pipeline development.

Our renewable resources also hold great potential. We have made great strides in our tourism industry, but there is room for considerable growth. NWT fashion designers are making the national scene with products that combine traditional materials and methods with a more contemporary look. Our forestry and agricultural potential has not been realized.

The renewable resource sector is especially important to the smaller communities and to those who prefer seasonal employment or employment related to traditional skills. Tourism now generates in excess of $30 million a year in income in the NWT. The recent display of northern fur garments at the Montreal fur exposition confirms the world demand for our high quality northern wild fur. With healthy fish and wildlife populations, outfitting continues to provide seasonal employment for over 300 northerners. Proven agricultural ventures include two egg production facilities and successful market gardens located in Hay River and Fort Smith. The egg quota alone exceeds $3.8 million in value. Opportunities exist in such areas as secondary processing of timber, the harvest of wild plants and agriculture. Examples of recent success stories in these new areas include the test harvest of morel mushrooms in the Yellowknife area last summer and the Inuvik Community Garden Project. Development of the renewable resource sector is critical to developing a diverse and stable economy.

Finally, the development of our resources needs to be balanced against the impact on our environment. The Government of the Northwest Territories is coordinating the development of a northern strategy to control greenhouse gases. This process involves over 40 federal and territorial agencies, Aboriginal organizations, industry and environmental groups. The general public will be part of the consultation process as well. The draft strategy to control greenhouse gas emissions will be presented to Cabinet in the fall of 2000.

Mr. Speaker, we are working to maximize the opportunities for northerners from development of our resources. To do this, we have to address a number of challenges, such as the need to provide training, to build the necessary infrastructure and to ensure that we as northerners benefit from development. The Government of the Northwest Territories has made a substantial investment in promoting a secondary diamond industry, and has supported Aboriginal organizations in becoming partners. In addition to the direct funding of $5 million to support and promote value-added diamond initiatives, the GNWT has also approved $20 million in loan guarantees to three companies establishing operations in the Northwest Territories. Within our means, we are committed to continuing to provide similar support to northern companies working in the oil and gas sectors.

In January of last year, the previous Minister of Resources, Wildlife and Economic Development, the Honourable Stephen Kakfwi, initiated the Economic Strategy Panel, representing a cross-section of Northwest Territories interests, to examine the opportunities and challenges we face. The diverse interests represented on the panel have ensured a broad and informed view of what needs to be done to stimulate development and improve the circumstances of Northwest Territories residents.

Under the leadership of Mr. Richard Nerysoo and Mr. Daryl Beaulieu, the panel has completed its work and has provided the comprehensive recommendations we need to focus our economic development efforts.

I am pleased to announce that the report of the Economic Strategy Panel, entitled "Common Ground", will be tabled during this Session, and I look forward to the debate of the reportis discussion and recommendations. The document will also be made available to interest groups and the general public to ensure we are on common ground and can proceed confidently with a clear and definitive economic development strategy for the Northwest Territories.

Development of our non-renewable resources has the potential to generate $35 billion in resource royalties and over $55 billion in taxes to both levels of government over the life of known and potential reserves. An agreement on devolution of authority for resource management with Canada would allow a significant portion of those revenues to flow to northern governments n both public and Aboriginal.

But in order to realize those revenues, major investments must be made today. The NWT lacks the basic infrastructure to support economic development, including a system of all-weather roads, communications systems on par with the rest of Canada, and municipal services that can support rapid community expansion. Many northern residents lack the educational levels that would allow them to take advantage of jobs created by development. Northern businesses, including Aboriginal development corporations, may not have access to the necessary venture capital or expertise. Industry has told us time and time again that the regulatory regime in the north needs to be streamlined, and that the rules have to be clearer, before they are willing to make major investments in the development of our resources.

In order to address these challenges, I have proposed a Non-Renewable Resource Development Strategy. The strategy outlines the investments that are required to create the right environment for resource development in the north, to manage development effectively, and to ensure that northern residents reap maximum benefits.

But this is not just a plan for the Government of the Northwest Territories. We can not do it alone. We want to see all the parties with an interest in northern resource development work together to make the needed investments n including the federal government, the territorial government, Aboriginal groups and industry. For this reason, we have presented our proposal to the federal Ministers of Indian and Northern Affairs and Finance, to our Aboriginal partners through the Intergovernmental Forum, and also to members of industry.

The strategy proposes an investment level of $340 million over the next four years. Mr. Speaker, the GNWT is prepared to do our part n we propose to maintain current levels of investment totalling more than $100 million over four years. We are hopeful that the federal government will make the required level of commitment and invest in a bright future for the Northwest Territories.

Part of the strategy is the vision of a Mackenzie Valley gas pipeline, which would bring natural gas from the Beaufort Sea and Mackenzie Delta to markets in southern Canada and the United States. This pipeline would also be the cheapest way to bring gas from northern Alaska to markets, and would allow for the development of other reserves along the route of the pipeline.

A Mackenzie Valley pipeline would also provide significant benefits to the rest of Canada. Much of the equipment and materials used to build the pipeline will come from southern Canada. We estimate that a Mackenzie Valley pipeline, with a link to Alaska's Prudhoe Bay reserves, would result in about 80,000 person-years of direct, indirect and induced employment during construction. Eighty per cent of these jobs will be in southern Canada. The construction would increase Canadian Gross Domestic Product by $5.5 billion. More secure supplies of natural gas would replace other kinds of fuel and help Canada meet its commitments to reduce greenhouse gases under the Kyoto Accord.

To respond to ongoing and future development of the Northwest Territoriesi resources, a number of initiatives will be undertaken by this government this year. The Department of Resources, Wildlife and Economic Development will commit over $700,000 this fiscal year to help communities prepare for this development. These initiatives include:

 

We will also make investments to ensure northerners have the education they need to take advantage of job opportunities. The Department of Education, Culture and Employment will spend $1.3 million in 2000-2001 to promote employment in the oil and gas and diamond industries. The department will also invest an additional $1 million to target youth employment.

The recent expansion in the Northwest Territoriesi resource industries has increased the demands on the territorial highway system. To keep pace with this heavier, industrial traffic, the Department of Transportation has planned capital improvements for Highways 3,4,7 and 8 where the impacts of the increased traffic have been greatest.

The reconstruction of Highway 3 between Rae and Yellowknife should progress by another eight kilometres this year at a cost of $6 million. The Department is involved in federal-territorial discussions to apportion the $600 million in National Highway Program funds announced by the federal government earlier this year and it is hoped that a significant amount will be allocated to the NWT for work on the RaenYellowknife portion of Highway 3.

In anticipation of continuing oil and gas industry development in the Liard Valley, approximately $500,000 is scheduled for grade stabilization and surface improvements on the first 50 kilometres of Highway 7 from the British Columbia border north to Fort Liard.

On Highway 8, the Dempster Highway from the Yukon border to Inuvik, the $2 million reconstruction program for 2000-2001 includes the installation of a new bridge at Campbell Creek south of Inuvik. The bridge replaces two large diameter culvert pipes and should prove more habitat friendly for fish stocks in the stream.

This year the Department of Transportation intends to continue its bridge program on the Mackenzie Valley winter road into the Sahtu. The completion of the Ochre River Bridge, at a cost of $960,000, will allow the winter road to open earlier and should extend the winter road season by as much as a week.

I would now like to turn to the issue of taxation. Today I am announcing a tax initiative which I believe will help make our economy more diversified. Mr. Speaker, the tourism potential in the NWT has barely been tapped. This industry can be an important component of the NWT economy and can play a key role in diversifying the economic base of our communities. First, we need to let potential tourists know where the NWT is and what we have to offer - we need to project a strong NWT image and promote the NWT as a destination throughout the world. Second, to better serve our customers we need to strengthen the base of tourism services in every region - we must develop quality attractions, products and services in every region and we must advertise these attractions.

However, to effectively achieve these two objectives, investments are necessary. The GNWT cannot afford the required investment on its own. One of the sources for such investment is a tax on hotel occupancy. Today I am proposing that the Government of the Northwest Territories, effective April 1, 2001, adopt a 5 per cent tax on occupancy charges in commercial accommodation facilities with four or more rooms. We propose that the estimated $1 million in annual revenue raised from this tax would be reinvested in tourism with the goal of developing our tourism potential. If this tax is approved, the Department of Resources, Wildlife and Economic Development will be coming forward with a plan for tourism promotion for inclusion in the 2001-2002 Budget.

It is my intention to introduce legislation respecting this measure later during this Session. I will also be seeking input from MLAs, individuals, and business groups, in particular the tourism industry, and other organizations prior to the passage of this legislation.

BECOMING MORE SELF-RELIANT

The fourth priority the 14th Assembly has set is to secure "Adequate resources to help all levels of government to become more self-reliant in meeting the needs of the people they serve." This is key to achieving the Assemblyis vision of "a strong, unified and self-reliant Northwest Territories that can take its rightful place in the federation and the international community". Mr. Speaker, for the first time in our history, we are poised to achieve that vision, and to become the first "have" territory in Canada.

New resource development in the Northwest Territories has the potential to provide as much as $90 billion in royalties and tax revenues for government over the life of the developments n most of which will flow to the federal government. Funds from resource development have the potential to help finance needed investment in infrastructure and growing costs in the social area.

The three territories are the only jurisdictions in Canada which still do not have complete control over their non-renewable resources. Virtually all of the mineral and oil and gas royalties generated in the Northwest Territories currently go to the federal government. As well, about eighty per cent of the NWT tax revenues generated by resource development reduce the Grant from Canada. As a result, the Government of the Northwest Territories does not have the money required to fund the infrastructure necessary for the new development or to mitigate the social impacts of development.

Steps need to be taken immediately to ensure that these funds flow to the governments, both the Government of the Northwest Territories and the Aboriginal governments, that have the responsibility for providing services to the people of the north. Devolution of both control over development and the revenue from natural resources needs to happen to provide the residents of the Northwest Territories advantages equal to those enjoyed by residents of the provinces.

Investments needed to take full advantage of development, such as the investments made in secondary diamond processing, have been primarily funded by the Government of the Northwest Territories. This has resulted in higher deficits and fewer resources over the short term for other programs. The Northwest Territories does not have the capacity to make these pro-active investments alone. We need to act now to ensure that the revenues from resource development in the north go to northern governments to provide needed investments and services for northern residents.

Northern control over resources will allow northerners to take better advantage of our non-renewable resources, ensuring that development occurs when northern residents are able to take maximum advantage of it. Control will allow us to ensure that more processing occurs in the north, and that there are more employment opportunities for northerners. Control will also allow us to bring clarity and certainty to the regulatory and fiscal regimes. If northern governments have full control over all our resources and diamond, oil and gas developments proceed, the Northwest Territories could become a "have" territory over the next ten years.

CONCLUSION

Mr. Speaker, I sincerely believe that the future of the Northwest Territories has never looked brighter. There will be opportunities over the next ten years in a number of areas for developments that can benefit the residents of the Northwest Territories. But we need to act now to ensure that we can take full advantage of these opportunities. We cannot afford to wait.

The Legislative Assembly has set out a vision of a strong, unified and self-reliant Northwest Territories that can take its rightful place in Canada.

We need to make the right decisions over the next few years to ensure that we achieve this vision. We are doing our best to improve social well-being and service levels with existing resources, but we need full access to the revenues from our resources if we are to make significant progress towards addressing our problems. We need to ensure that we continue to maintain a tax and regulatory environment that does not unnecessarily restrict business, without compromising the environment or social programs.

We must work in partnership with the federal and Aboriginal governments to ensure that northerners benefit from the development of our resources and that northern governments have the resources needed to take our place in Canada to provide top quality programs and services to our residents.

Mr. Speaker, it is clear there is a lot to do over the next four years and we, as the 14th Legislative Assembly, have developed a vision of what we want to accomplish. We face many challenges in the north, but there are many opportunities as well. Although we are forecasting a deficit budget for the fiscal year 2000-2001, we are maintaining the levels of services provided to northerners and investing where we can to provide maximum returns on the future n both for our people and our economy. In closing, I would like to re-state my optimism for the future and that I truly believe these are exciting times.