moved that Bill C-530, An Act to amend the Northwest Territories Act (borrowing limits), be read the second time and referred to a committee.
Mr. Speaker, I am pleased to have an opportunity to stand here today. It is the first time I have had the opportunity to put forward a private member's bill for debate. It is certainly something that I am sure every MP looks forward to in his career here in Parliament.
Members of this House have heard me say many times how the people of the Northwest Territories want to be masters in their own land. I think this is something people in every province aspire to.
I have spoken about how the NWT is a mature jurisdiction and should not be controlled by Ottawa. Members have also heard me mention that the people of the Northwest Territories know that their requirement for infrastructure is one of the keys to building a better north, a more prosperous north, a north that can better share its wealth with the rest of Canada.
Bill C-530 is a small step towards achieving these aspirations. As many members already know, the Northwest Territories is a creation of this House, much like Canada was a creation of the British House of Commons.
Currently, under the Northwest Territories Act, before the NWT can borrow any money it must first ask permission of the federal cabinet. By practice, the cabinet has set a limit on the amount the NWT may borrow. Currently the limit is $500 million. This is a recent increase from the previous limit of $300 million, an increase that took years of lobbying, persuading, and hard work to achieve.
Unfortunately, when the lobbying started all those years ago, $500 million was sufficient. Today it barely meets the needs of the NWT and will not be adequate for the future.
However, even though it was nowhere near sufficient, because the funds were so badly needed when the limit was increased in 2007, the territorial government said in a press release:
This is a significant step in providing the GNWT with flexibility to make strategic investments in infrastructure to improve the lives of Northerners.
It was not enough. What my bill does is provide the Northwest Territories with a line of credit they can use to finance the building of vital infrastructure, ensuring that our territory progresses in a good fashion.
My bill provides a formula for borrowing based on gross revenues applied every year. The figure we have set is 70% of gross revenues. If my bill passes, the Government of the Northwest Territories will be able to borrow up to 70% of its gross revenues for that year, in totality. The debt is in totality, of course. That would be the total debt that it is allowed to hold: 70% of the gross revenues of any particular year.
What is the government going to do with this borrowing power? Canada has many aspirations for the Northwest Territories and its development. We have heard the Minister of the Environment speak eloquently many times about the Mackenzie Valley pipeline.
Part of what we need to do to develop the Mackenzie Valley pipeline is develop a Mackenzie highway. This will cut the cost of the pipeline, and it will be an essential component of our vision of the Northwest Territories. Connecting all the communities of the Mackenzie Valley with an all-weather road would reduce living costs for residents, open up the rest of the Mackenzie Valley, and provide the opportunity for planned and careful development of our resources.
This is essential to us, but it is expensive. The Taltson hydro project is another example. We are moving ahead quickly to provide hydroelectric power to the diamond mines, which provide large amounts of revenue to the federal government as well as jobs and business opportunities in the Northwest Territories. However, the costs are very high because they use diesel fuel for all their power needs.
We propose that the Taltson hydro project go through an environmental assessment, but its cost is in excess of $500 million. Without better fiscal capacity within the Government of the Northwest Territories, it is going to be difficult for the people of the Northwest Territories to own this resource.
So once again we see the need for the Government of the Northwest Territories to have flexibility in fiscal capacity in order to accomplish projects that actually are self-financing, such as the Taltson project. Even if a project is self-financing and is owned by the Government of the Northwest Territories, it goes against its borrowing limit. So we are shackled right now by this borrowing limit that is in place.
Another example is the road to Tuktoyaktuk, which the previous Minister of Indian Affairs and Northern Development thought was a great project. He put money into the feasibility work that was going on, which got the project up to a point where it could go to an environmental assessment. It is a $100 million investment to tie in Tuktoyaktuk with Inuvik. This would give us year-round access to the port of Tuktoyaktuk on the Arctic Ocean, something that will assist in every fashion with the development of the north.
Where is the money going to come from for this? How can the Government of the Northwest Territories make arrangements with the federal government on shared projects or work together with other interests to create these projects without available fiscal capacity when it needs it?
There are many more examples, such as the need to upgrade the Liard Highway, at about $50 million, in order to bring tourists into Nahanni National Park. This government supported its expansion two years ago, but we need to improve access into the area in order to make that world heritage site available to Canadians and create a tourist opportunity greater than we have today.
Through these vital infrastructure projects and many others, the Northwest Territories will be able to begin developing its full potential.
Infrastructure is important, but we also need to look at our communities. Many communities need infrastructure in order to provide a comparable standard of living with other communities across this great nation. We want that for our communities. We need to invest in our communities to make that possible.
These are some of the fundamental reasons we want to see a change in the borrowing limit. We need the money. We need the opportunity and fiscal capacity for our government to be able to do this.
Why should we trust this government?
The negotiators for the Government of the Northwest Territories and Canada have recommended the acceptance of a draft agreement in principle that would transfer administration and control of lands and resources from Canada to the Northwest Territories. We call that “devolution”. There is much work to be done on this yet. There are many parties in the Northwest Territories that have to come together on this agreement, no doubt. However, this is the closest we have come in a very long time to getting an agreement.
Once devolution is complete, the people of the Northwest Territories will become masters in their homeland to a greater extent than before, and to an extent that is almost similar to that of the provinces. But to reap the benefits of devolution, we need to invest in our territory. This is not going to happen without that investment. My bill provides a vital tool to achieve that.
The first line of the AIP says:
WHEREAS, to enhance the ability of the Government of the Northwest Territories to serve the interests of its constituents
That is my reason as well for bringing forward this bill. It is not in the interest of the people of the Northwest Territories to have to have its government come forward on regular intervals to beg Ottawa for an increase in the amount it has to borrow. This is not responsible government. This is not the kind of relationship that we want to have with Ottawa. This is not the way that Canadians should be treated in this land today.
On March 26 of this year, Moody's Investors Service gave the Northwest Territories an Aa1 rating. This rating is the second highest, and in terms of credit risk, it places the NWT in line with most of the provinces, and in fact higher than many of the provinces. This is the second year in a row that Moody's has issued the NWT such a high rating.
Moody's rating takes into account recent developments related to the Deh Cho Bridge project. So a project that was somewhat controversial is under this rating. The credit opinion notes that Moody's had already included the Deh Cho Bridge liability in its calculations of the NWT's net direct and indirect debt, reflecting the government's debt-like obligation to make periodic availability payments. As such, formal assumption of the related debt is not expected to alter the NWT's credit profile in a material way.
According to Moody's, the rating reflects:
prudent fiscal policies that have, over the past several years, limited debt accumulation. A well-developed fiscal framework (including a Fiscal Responsibility Policy which guides the NWT's fiscal policies and use of debt) should help to ensure that the debt burden remains low and affordable.
The NWT's fiscal responsibility policy mandates how the NWT may borrow. The policy guides NWT's fiscal policies and use of debt and includes guidelines respecting the type of activities for which debt can be issued, as well as limits on total debt and debt-servicing costs to ensure affordability.
What a remarkable thing for a small territory to do.
Under this policy, affordable debt is considered the level of debt where the corresponding annual debt servicing payments do not exceed 5% of total annual revenues. Infrastructure debt has to be paid off within 20 years. Debt for self-liquidating investments will be repaid from new revenues such as user fees, tolls, or expenditure savings. Debt incurred to finance repayable loan programs will be repaid from cash generated from the loan repayments and corresponding interest revenue.
Our territory is responsible. It is acting in a manner that many other provinces should emulate. Yet, at the same time, we do not have the fiscal capacity to do the things that we need to do for our territory.
I hope that Parliament will join with me in giving the Northwest Territories the tools it needs to build a strong and beautiful part of Canada.
In the words of the Hon. Floyd Roland when he was minister of finance:
This borrowing limit flies in the face of the principle of territorial political autonomy. It reflects an outdated and unreasonable view that we cannot make sound financial decisions on our own.
My bill would bring an end to this outdated and unreasonable situation.