Bill C-530 (Historical)

An Act to amend the Northwest Territories Act (borrowing limits)

This enactment amends the Northwest Territories Act to allow the Commissioner to borrow money up to a certain limit without the approval of the Governor in Council.

Indian Affairs and Northern Development

[Bruce Stanton, Conservative, Simcoe North, ON]

Mr. Speaker, before I table my report, I would like to use this occasion also to thank you for all the work you have done and the help you have provided. It was a great privilege to travel with you in May of last year. That is a trip that I am sure will be in my memories for the rest of my years and I appreciate that.

Mr. Speaker, I have the honour to present, in both official languages, the sixth report of the Standing Committee on Aboriginal Affairs and Northern Development concerning Bill C-530, An Act to amend the Northwest Territories Act (borrowing limits). The committee has studied the bill and has decided to report the bill back to the House without amendment.

[The Chair, Conservative, Bruce Stanton]

Thank you, Ms. Crowder.

That is all I have left on the list at this point, unless there are more who wish to put questions.

Just before we go to the next item on our agenda, I want to come back to a procedural point that I perhaps glossed over and that I want to point out for members. In our consideration of the motion by Mr. Rickford, there was a suggestion to move directly to the question. Normally that should not happen until all of the speakers on the list have had an opportunity to put their question. Ms. Crowder had been next on the list, and she indicated that she would relinquish her spot. However, there were two government members still on the list. So I apologize to government members, because we jumped quickly to the question, and I didn't seek the same consideration as to whether the two government members wished to relinquish their spots as well. I erred in that, and I do apologize.

Let's now go to the clause-by-clause consideration. We have Mr. Wayne Cole here with us from the legislative services office to assist us.

I must say that it is a very technical bill.

We're still in public. You're welcome to stay. If witnesses need to leave, thank you for your participation. You're welcome to stay if you wish. This shouldn't take too long.

We welcomed your participation here and your assistance in clarifying these questions on Bill C-530. Thank you very much, and have a safe trip back.

Thank you, Mr. Bagnell.

This is a very short bill, so we'll proceed with clause 1.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Mr. Bevington, you surely know that we intended to start clause-by-clause study of the bill in a few minutes.

In answer to my colleague, Mr. Payne, you said that you would agree to let the Auditor General study the bill. You know that this could indefinitely delay its passage. Is it really necessary for the Auditor General to review the implications of Bill C-530?

[Greg Rickford, Conservative, Kenora, ON]

On a political level, we've heard some inconsistent statements in terms of the position on Bill C-530. I think my colleague will deal with that.

With this devolution process, which is not connected to borrowing limits...maybe you could describe how the devolution process is going, in your view, to make Bill C-530 relevant in the face of a process that is currently well under way with the Government of Canada.

[Greg Rickford, Conservative, Kenora, ON]

If we were thinking paternalistically and we had a federal member of Parliament intruding on a process that is not consistent with the territories' ultimate goal...the concerns of the federal government notwithstanding, they seem to be at odds with each other. That's just an observation I would make.

I'm curious. You said in your statement that you're committed to the review process that is under way with Canada. There are some consistency issues around accounting and things that have to be sorted out with respect to the other territories.

You say that you haven't done a rigorous analysis on Bill C-530. We're one step, one hour, away from referring this matter back to the House for a final vote. It has a substantial impact on the process you're currently committed to with the federal government.

Is there a specific reason that you didn't do a rigorous analysis? Is the bill unimportant in your mind? In other words, the real process is what you're doing with the federal government, so why haven't you done a rigorous analysis? I'm just curious.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

You said that if Bill C-530 is passed, "it could also put the federal Cabinet in a difficult situation".

I do not really understand what you mean. Up to that point, everything was clear.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

I want to thank the witnesses for being here.

You will easily understand my position, Ms. Melhorn. Any act of sovereignty by a territory is welcome. Obviously, we agree on what you said. We will clearly support Bill C-530 because it represents an act of sovereignty. You know my party's position. The Aa1 credit-rating that Moody's gave you is indeed very good.

I see there is some uncertainty here. I know, Mr. Forbes, that you cannot take a political stand on behalf of the Minister and that you are engaged in the discussions. However, I want to ask you a question. How much, in millions of dollars, is 76% of the GNWT's budget? How much is that exactly?

[Chris Forbes, Assistant Deputy Minister, Federal-Provincial Relations and Social Policy Branch, Department of Finance]

Thank you, Mr. Chair.

Thank you to the members of the committee for the invitation to speak before you this morning.

I would like to use my time to explain what the territorial borrowing limits are, the history behind our current policy, the Department of Finance's role in its administration, and to provide some remarks on the Bill before you today.

Under the Northwest Territories Act, Yukon Act and Nunavut Act, Parliament authorizes territorial governments to borrow money. This general authority is restricted by the condition that any such borrowing must be approved by the Governor in Council. The Governor in Council approves territorial borrowing up to a preestablished amount set through Order in Council. This ceiling on the territorial borrowing authority is known as the borrowing limit.

For the Northwest Territories, as my colleague mentioned, this limit is currently $575 million. Orders in Council for Yukon and Nunavut set their borrowing limits at $300 million and $200 million, respectively.

A quick history of the borrowing limits illustrates how the administration of the territorial borrowing authorities has evolved. Originally, the federal government loaned territorial governments money for their capital requirements. Territorial governments were first granted the authority to borrow on the open market in 1983. The federal government has increased the territorial borrowing limits from time to time, in response to territorial requests.

The Department of Finance is responsible for the administration of the three territorial borrowing limits. The administration of these limits is guided by a number of considerations, and I’ll go through three of them now.

The first consideration I'll cover is the capacity of territorial governments to carry debt. The federal government, as you know, makes a significant contribution to support the provision of programs and services in the territories. For example, major transfers from Canada currently account for 76% of the Government of the Northwest Territories' budget, of which the territorial formula financing grant is the major component. The borrowing limits ensure that this funding is not unduly consumed by interest and debt repayment costs. The government reviews the size of the limits when requested by a territorial government. The government then evaluates the territory's economic and fiscal outlook and current borrowings on the basis of the information provided by the territorial government itself. Increases are recommended to the Governor in Council when a request for an increase is supported by economic circumstances.

A second consideration in the administration of the limits is that the territories are responsible for their own decisions. The structure of pre-established limits balances the federal government's statutory responsibility to approve the amounts borrowed by territorial governments with the need to respect territorial authority to make borrowing decisions, individual borrowing decisions, as authorized by the territorial acts. The federal government does not review individual territorial decisions taken within their limits. Territorial governments are then responsible for the exercise of their own authorities.

A final consideration I'll mention now about the administration of the limits is that they support fiscal planning. The borrowing limits described in order in council are fixed until such a time as a territory requests an increase and the government approves one. This structure provides predictability to territorial governments when making long-term fiscal plans.

Last May, again, as Ms. Melhorn indicated, Minister Flaherty indicated to the three territories that there would be a general review of their borrowing limits to ensure that accounting practices within the borrowing limit align with general accounting practices. This review is not the same as the limit assessments that have been done in the past at the request of the territories. This is a review of the operation of the borrowing limits for all three territories to ensure clarity in the treatment of all borrowing instruments available to governments. Territorial officials are being consulted during the review.

I'll conclude with some remarks about Bill C-530. This is the bill that current borrowing authority for the Government of the Northwest Territories be changed to equal 70% of the revenues it projects for the upcoming year. Based on my understanding, this would move the Government of the Northwest Territories' borrowing limit from $575 million to about $950 million and would change the structure from a fixed limit to one with a potential to move or change annually.

My first observation is that the introduction of a variation in the proposed structure doesn't make it clear what the limit will be in future years. A limit that varies from year to year could create challenges for territorial fiscal planners.

My second observation is that Bill C-530 retains the authority for the territorial government to request an additional increase from the federal government. While this could be helpful in a situation where the borrowing limit ends up being lower than projected, it does also put the federal government in a difficult situation if refusing to approve an increase in the borrowing limit could cause the Government of the Northwest Territories to be in breach of its borrowing authority since the approval could potentially be requested after the borrowing terms have been signed.

That ends my remarks. I'd like to thank the committee for the opportunity to speak to you today, and I’d be happy to take any questions you have.

[Margaret Melhorn]

One other significant anomaly in our government's authority is the inability to borrow without federal cabinet approval. Section 20 of the Northwest Territories Act requires the GNWT to obtain Governor in Council approval to borrow. The most recent order in council approved last April authorizes the GNWT to borrow up to $575 million until March 31, 2015, and up to $500 million thereafter. This requirement for federal approval to borrow is a shortcoming in the NWT Act. We would prefer either to eliminate the requirement altogether or to base it on provisions similar to our fiscal responsibility policy.

Governments must be able to borrow to adequately plan for and deliver program services and infrastructure to their residents. The imposition of a borrowing limit has long been an issue for the GNWT. The Northwest Territories has a significant infrastructure deficit. The territories lack of transportation and energy infrastructure is a barrier to economic development and to the well-being of our residents. Other governments are able to borrow to finance large capital investments and to service that debt either from tax revenues or from revenues generated by the project, such as tolls or power sales.

The GNWT borrowing limit is inadequate to allow for the investment in the infrastructure we require. In the absence of an adequate borrowing limit or additional funding to meet infrastructure needs, the GNWT has two options: reduce spending on core programs and services or not make necessary investments. This means that NWT residents are not able to take advantage of economic opportunities and the GNWT is not able to make investments that will create long-term benefits.

The borrowing limit is part of a continuing dialogue between the GNWT and the federal government. In 2006 we requested that the borrowing limit be changed to reflect the approach to debt and borrowing that we have adopted in our fiscal responsibility policy. In 2007 the limit was increased from $300 million to a more adequate $500 million. In April 2010 the limit was temporarily increased to $575 million to allow the GNWT to assume $165 million in debt associated with the Deh Cho Bridge project.

In May 2010 Minister Flaherty asked his territorial counterparts to participate in a general review of the territorial borrowing limits to clarify the definitions used by all three territories with respect to what constitutes borrowing for the purposes of the limits. The NWT Department of Finance is working with Finance Canada and the other territories to complete this review. The review, however, has created uncertainty for the GNWT. One of its potential consequences is a change in the treatment of some debt. Some changes might give us more room, but other changes might require the GNWT to request an increase in the limit. Currently, the review does not include discussions about the adequacy of the limit.

Any discussion about the borrowing limit should be twofold. It should address both the adequacy of the limit and the definition of borrowing included in the limit. Neither the NWT Act nor the federal order in council defines borrowing for the purposes of section 20 of the act. The GNWT has relied on advice from our own legal counsel as well as that from the Auditor General of Canada to establish our definition.

For the purposes of the limit, the GNWT defines borrowing as bank lines of credit to the extent that they're actually used, other short-term debt, long-term debentures, bond issues, and mortgages. This applies to direct GNWT borrowing as well as to the borrowing of GNWT agencies, including territorial corporations. The GNWT's fiscal responsibility policy provides clear guidelines for responsible spending, borrowing, and debt repayment, and it defines affordable borrowing limits. The policy has played an important role in maintaining Moody's Investors Service's favourable ratings on GNWT debt since it began rating our debt in 2005. Moody's currently rates GNWT debt as Aa1, one of the highest available ratings.

Under the policy, the GNWT only borrows for infrastructure investments, self-liquidating investments, and repayable loan programs. Total debt is considered affordable as long as the debt servicing payments, both principal and interest, are no greater than 5% of our total revenues. If that threshold is exceeded, operating surpluses must be generated in the following two years to permit principal repayments that will bring debt servicing costs to 5% by the third year. The GNWT is accountable for its management of borrowings through performance criteria, thereby ensuring that total borrowing does not exceed our ability to repay it.

The federal order in council limiting the amount the GNWT may borrow sets an arbitrary amount not explicitly linked to the GNWT's capacity to finance debt.

Our 2006 proposal to Finance Canada requested a blanket authority to borrow for the following reasons.

First, the limit is contrary to the principle of territorial autonomy and decision-making.

Second, the limit is too restrictive, especially since approximately two-thirds of the GNWT's debt is self-liquidating--that is, the cost of servicing the debt is financed by a dedicated stream of revenues from tolls and customers, and not by other government revenues.

Third, the GNWT has demonstrated prudent fiscal management and has a fiscal responsibility policy with clear guidelines and a responsible definition of affordable borrowing limits.

Bill C-530 is one approach to increasing the ability of the GNWT to borrow. The bill would somewhat reduce the arbitrariness of the borrowing limit by linking it to the government's revenues. It would also result in a higher borrowing limit. However, the bill does not define what types of borrowing are to be included in the limit. While the GNWT would welcome a higher borrowing limit, if it means other potential liabilities such as unused portions of bank credit or guaranteed debt that is not a draw on general government revenues are included in the definition, then we may be in the same position we are in now.

The GNWT has not performed any rigorous analysis of the bill. Our preferred approach would be to eliminate the borrowing limit completely. As a responsible government, the GNWT would continue to exercise prudent debt management strategies and adhere to the limits within the fiscal responsibility policy.

The GNWT is committed to the current review process under way with Canada and the other territories. The review will create certainty with respect to the treatment of borrowing and debt for the purposes of the limit. However, this review is not considering the adequacy of the borrowing limit to permit the territories to borrow for large-scale resource development, front-end investment for economic growth, and the capital infrastructure investment required for the normal delivery of government programs.

The GNWT would like to change the question from “What is an appropriate limit?” to “Why should a responsible government be subject to an externally imposed limit on the amount it can borrow?” We are committed to our fiscal responsibility policy, which is based on the principle of living within our means and avoiding unaffordable levels of debt. If there must be a legislated borrowing limit, a formula-based approach mirroring the requirements of the fiscal responsibility policy is preferable to an arbitrary amount.

Canada needs to consider its role in the long-term development of the NWT. The size and definition of the borrowing limit have a very real impact on our government's ability to support needed investments in infrastructure that will grow the NWT economy and improve the lives of our residents. A longer-term perspective on the borrowing limit, one that enables the GNWT to make large, financially sustainable investments would be a win for both governments in our efforts to create a sustainable future for the NWT.

Thank you.

[The Chair, Conservative, Bruce Stanton]

Welcome to the members of the committee as well as to our guests and witnesses.

This is the 55th meeting of the Standing Committee on Aboriginal Affairs and Northern Development. Pursuant to the order of reference of Wednesday, February 12, 2011, we are continuing today our study of Bill C-530, An Act to amend the Northwest Territories Act (borrowing limits).

This morning, on the continuing study of this bill, we welcome guests from the Government of the Northwest Territories, as well as Finance Canada, and the Department of Indian and Northern Affairs Canada.

I'm sure you are familiar with the routine here. We have opening comments for up to 10 minutes. We're going to be hearing opening presentations from the Government of the Northwest Territories as well as from Finance Canada.

I think we'll go to the GNWT first. We welcome Ms. Margaret Melhorn, who is the Deputy Minister of Finance for the government. She is joined by Kelly Bluck, who is the manager for fiscal policy and intergovernmental relations. Ms. Melhorn, we'll go ahead for your opening presentation, and then we'll go to Mr. Forbes for Finance Canada.

Go ahead, Ms. Melhorn.

[The Chair, Conservative, Bruce Stanton]

No, this is on Bill C-530.

Thank you very much. Enjoy the rest of the day, members.

Thank you to our witnesses.

The meeting is adjourned.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Rickford. I'd also like to thank our witnesses for their presentations this morning.

If members are still here on Thursday, we will examine Bill C-530. We will hear from four witnesses and possibly proceed to clause-by-clause consideration.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

I would hardly call it offensive when I said before that the Bloc Québécois was going to vote against your bill. It is certainly not what we would do—and that is what our party was trying to tell you in the beginning—despite your position on Bill C-20 regarding the change to the development of Gatineau Park. Quebec would have really liked to be able to count on your support when the committee you were on was dealing with that bill. That being said, clearly, we will be supporting your bill. We asked our Bloc Québécois colleagues to respect your position, which we do not share, on Bill C-20. However, Bill C-530, which you put forward, is extremely important, and we will of course support it.

Furthermore, Mr. Bevington, I would like to know what will happen with the taxes and all the royalties. For instance, who gets the taxes payable by a mining company operating in the Northwest Territories? Does the part of the country you represent, the Northwest Territories, get a share or does it all go to the federal government?

[Dennis Bevington, NDP, Western Arctic, NT]

Thank you, Mr. Chair.

I very much appreciate being in front of your committee, although I have to say that a panel of peers is always a difficult situation. I expect no less careful scrutiny than any other witness who might come before you, and I'm sure that's what I'll get.

I want to thank those who have helped get this bill to this point and all parliamentarians who recognize the importance of the development of the north, and I think that includes everyone in Parliament. I had hoped we could have full support for this bill, because to me this bill represents a very important principle for the Northwest Territories, that of responsible government.

When we examined the Northwest Territories Act, which I did in conjunction with people in the Northwest Territories, at one point I had a meeting with the Premier of the Northwest Territories at which we discussed what would be their interest in amendments to the Northwest Territories Act going forward. Out of that discussion I had a number of amendments on the order paper in Parliament, and I chose this one because it was the most relevant to the current situation. It's also relevant to that concept of responsible government in which the ability to make choices on the part of a government is driven not only by the rules but by its capacity to invest, to grow, and to develop, and without fiscal capacity the territory that I represent is very limited.

As a person who has grown up and lived under the NWT Act in Canada my whole life, I know the nature of it. I know we are, compared to other parts of this country, less endowed with responsible government and less endowed with the ability to make choices for ourselves. Improving that situation for the Northwest Territories has been a goal of mine my whole life, so I'm very pleased to be here today.

I think changing the borrowing structure is a very small change within the NWT Act. At the present time, any increases to the borrowing power for the Government of the Northwest Territories have to be put through the cabinet of the Government of Canada. In the time I've been in Parliament here, over five years, we have already seen two requests for increases to the borrowing limit go forward to the cabinet of the Government of Canada.

We have a situation in which there is a problem for the Government of the Northwest Territories because it must come cap in hand to Ottawa. That relationship is not correct. That relationship can cause pressures that are not seemly for a government, pressures that can put a government in the position of having to acquiesce in other ways in order to get what it needs to be able to perform as a government.

My Bill C-530 would change that relationship so that the borrowing limit for the Government of the Northwest Territories would be set at 70% of the total revenues of the government in any one year. We feel that 70% is a very fair accommodation. It fits very well with the present fiscal policy of the Government of the Northwest Territories and the financial policy they enacted, whereby at no time can the debt interest payments exceed 5% of their gross revenues.

The Government of the Northwest Territories has set their fiscal policy very strictly, and that has provided them with an AA-plus rating from Moody's. That's higher than many provinces have; the Government of the Northwest Territories as it stands now has achieved a rating with its fiscal policies that's superior to that of many provinces. This act will give the government an ability to work their borrowing limit to a particular formula.

Why do we need to borrow more money in the Northwest Territories? Well, we're very much a developing territory, and in some years over the last decade we've seen the highest GDP growth of any region in the country. We need infrastructure terribly, and I appreciate the work that this committee has done in establishing a report on northern development. Within that report I think there is much knowledge, and there is an understanding of the situation in the Northwest Territories and in the other territories as well.

We must move away from this colonial structure that we have. It's not seemly. It's not right that the Government of the Northwest Territories has to go cap in hand to Ottawa for legitimate borrowing purposes, for legitimately moving ahead with its agenda as it sees fit. That is the nature of responsible government.

A number of issues were raised in the debate on the bill. I would just touch on them now.

Consultation was something that was questioned. I would just like to refer to a letter that was sent to me by the Premier of the Northwest Territories in October of last year, before I submitted this bill for second reading. He says:

Thank you for your letter of October 5, 2010, in which you lay out the provisions of Bill C-530, an act to amend the Northwest Territories Act. The bill would amend the Northwest Territories Act to allow the Commissioner to borrow money up to a certain limit....

I appreciate your concern and efforts with respect to the borrowing limit, and your offer to involve and coordinate with the Government of the Northwest Territories.

He goes on to say:

...the Minister of Finance...has advised me that he has asked his officials to undertake a review of the operation of the NWT's borrowing limit.

That would be the third review undertaken in the last five years.

He goes on to say:

This review will also include the Yukon and Nunavut governments. It is expected that the review will be concluded by the end of the fiscal year.

Well, there is still no movement on that review. At the same time, this clearly this shows that I have consulted with the government. The government knew about my plan.

The territorial government as it stands now has a need for increased fiscal capacity. It can't put all its eggs in one basket. It certainly couldn't put its eggs in my basket. It must continue to work to get the fiscal capacity from the Government of Canada in order for it to continue business.

My bill would change it, but they can't rely on my bill, because of course it has to go through a very long and rigorous procedure as a private member's bill, unless all parliamentarians consent to allowing it to move forward in a more expeditious fashion.

So consultation has taken place. That's the position of the Government of Northwest Territories, which is interested in the proposal because it sees it as being one that is ultimately stronger than what they can get simply by going to cabinet.

Another question was around the issue of negotiating the borrowing limit with all three territories together. I think that's really inappropriate, because we are three unique territories. It's very clear, with the movement on devolution, that this is the way we're going ahead. We're not going ahead as a single unit. We are three separate jurisdictions, and I think the respect for that reality has to be there. Each unique territory will have its own requirements and move in its own fashion.

The Government of Northwest Territories has a very strong fiscal policy. I would certainly be willing to share what I have on that with you.

In a letter from the Parliamentary Budget Officer it was indicated that this bill will not have an impact on federal government finances. That request was initiated by MP Mike Wallace to the Parliamentary Budget Officer. That letter was dated December 13, 2010.

All of this information is available to the committee, and I'd be willing to provide it if required.

[The Chair, Conservative, Bruce Stanton]

Good morning everyone.

Welcome to the 52nd meeting of the Standing Committee on Aboriginal Affairs and Northern Development.

According to today's agenda and pursuant to the order of reference for Wednesday, March 16, 2011, we will be studying Bill C-530, An Act to amend the Northwest Territories Act (borrowing limits).

And we would like to welcome Dennis Bevington, the Member of Parliament for Western Arctic.

Mr. Bevington, we have you in a different spot at the table than we are accustomed to.

You'll know, members, that Mr. Bevington is the sponsor of the bill.

You know the general routine here, Mr. Bevington. We'll go ahead with your opening presentation and then we'll go directly to questions from members. Go ahead.

NORTHWEST TERRITORIES ACT

[The Speaker, Liberal, Peter Milliken]

The House will now proceed to the taking of the deferred recorded division on the motion at the second reading stage of Bill C-530 under private members' business.

The House resumed from February 10 consideration of the motion that Bill C-530, An Act to amend the Northwest Territories Act (borrowing limits), be read the second time and referred to a committee.

Northwest Territories Act

[Tony Martin, NDP, Sault Ste. Marie, ON]

Madam Speaker, I appreciate the opportunity this afternoon to speak to this very important motion by my colleague from the Northwest Territories, the member for Western Arctic. I say that because I have watched him work over the last two sessions of the House as he has represented so ably and actively his constituency, all those who live there and all those who govern that wonderful territory. I have nothing but admiration for the efforts he has made to gather all of the background documents, statistics, and information that were necessary to place the bill in front of us here today.

In the member's own words, from the speech he made introducing the bill, “It 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”.

I am disappointed in the speech that was given by the member for Saint Boniface a few minutes ago, particularly the way she maligned and tried to lessen the importance of the work the member is doing and to somehow suggest it is less than in keeping and in tune with what the Northwest Territories wants for itself. She had some misinformation in her presentation. For example, she mentioned a member of the Northwest Territory government as Dave Mackenzie when in fact that member is Dave Ramsay.

I know that the member for Western Arctic has the support of the Government of the Northwest Territories and he is working in consort with them as they work with the government on devolution. I was there when he spoke to the finance minister, Michael Miltenberger, and I know of the support and enthusiasm of that very important member of that government for this initiative and how he sees this as adding to its ability to make those investments that will be necessary if it is actually going to be able to take advantage of the devolution that is taking place.

I want to speak for a few minutes about the member for Western Arctic to make sure people understand that this is a member who did not just by chance somehow arrive here, through some fluke of an election. The member has worked long and hard. He was born and raised in the Northwest Territories, knows the Northwest Territories, knows the people and communities of the Northwest Territories intimately, having served for over 10 years as the mayor of the wonderful town of Fort Smith. He served on the green funds council of the Federation of Canadian Municipalities which worked with him to better the lot of municipalities in the territories. He served as a special adviser on energy to the premier of the Northwest Territories. He also served as a board member on the Northern River Basins study and as a federal government representative on the Mackenzie Valley Environmental Impact Review Board. The member who has introduced the bill before us that we debate here today also served as a former chair of the constitutional development steering committee for the Western Arctic, and as co-chair of that committee, where the member learned how passionate northerners are about increasing their autonomy and becoming a jurisdiction equal to the provinces.

Bill C-530 is a small but very important step in this increased autonomy. It is something he has thought long and hard about, worked very hard on, and believes in passionately. He has consulted with and has the support of some very important officials in the Northwest Territories government.

As background for the people listening, in case they were put off by the member for Saint Boniface in her diatribe before us here today, the Northwest Territories has a government which evolved from a committee of bureaucrats at Indian and Northern Affairs to a full-fledged, democratically elected government with full ministerial responsibility.

From 1897 to 1905, the Northwest Territories had an elected government resembling a province, but in 1905, after the provinces of Saskatchewan and Alberta were created, what was left of the Northwest Territories slipped back to the status of a colony. The member wants to remove it from that. For the next 60 years a commissioner and an appointed territorial council ran the territory from Ottawa.

In the 1950s, a return to an elected government for the territories began. In 1951, the Northwest Territories Act was changed to permit three elected members from the Mackenzie district to join the four appointed members and the commissioner on the territorial council. At this time the council also began to alternate its sittings between Ottawa and the Northwest Territories.

Between 1955 and 1966 the powers of the territorial council were gradually increased, and by 1966, elected members formed the majority on the council.

In 1967, the administration of the Northwest Territories moved from Ottawa to Yellowknife. In 1975, the territorial council became a fully elected body and its member began to call it the legislative assembly the following year.

In 1965, following consultations across the territories, the federal Carrothers Commission recommended a gradual increase in territorial responsibility through the setting up of a working territorial government. The Carrothers report had a lot of influence. In 1967, Yellowknife was made the capital of the Northwest Territories and the first commissioner to be permanently based in the territories was appointed.

Many province-like responsibilities were taken over from the federal government in the following years. This included such things as education, housing and social services. Other responsibilities like health care, forest management and fire suppression were taken over in the 1980s. Crown lands, oil, gas and mineral resources continued to be administered by the federal government.

Responsible government gradually developed after 1975. In that year the first two MLAs were appointed to the commissioner's executive committee. The executive committee later became the executive council or cabinet of the territories.

In 1986, Commissioner Parker turned over his last cabinet responsibilities to elected MLAs, a step that was authorized by the minister of Indian Affairs and Northern Development under the Northwest Territories Act. This step marks full, responsible government.

Since the 1980s, the government of the Northwest Territories and the other territorial governments have gradually won the right to attend federal-provincial meetings along with the provinces. The GNWT now also participates in the western premiers conference and the annual premiers conferences. However, territorial governments are not counted for purposes of a formal amendment to the Constitution of Canada under part 5 of the Constitution Act, 1982.

Why the need for Bill C-530? The requirement that a mature government, like the Northwest Territories, must come to Ottawa, cap in hand, requesting permission to borrow is a holdover from the days when the territories were administered by a committee of bureaucrats from Indian and Northern Affairs.

The territories government has a long history of balanced budgets and being responsible. Today it prudently administers $1 billion-plus budget. It is time Canada treated the Northwest Territories like the mature jurisdiction it is.

I urge members of the House, as they do all other provinces and jurisdictions in this great land, to trust this territory. Trust the member of Parliament for Western Arctic who has been sent by the people of the Northwest Territories to this place to speak on their behalf, as he does so well, day in and day out in this place. He asks us to allow the territory to have borrowing power so it can make the investments it needs and the infrastructure that will be necessary when devolution finally and ultimately takes place.

I hope that members of the House will ignore what was said by the member for Saint Boniface previously and look at Hansard to see what the member for Western Arctic said when he introduced this bill and what I have said here today, and vote in favour of this important initiative.

The House resumed from November 3 consideration of the motion that Bill C-530, An Act to amend the Northwest Territories Act (borrowing limits), be read the second time and referred to a committee.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Mr. Speaker, I congratulate the hon. member for Western Arctic for his work on Bill C-530. He is also an extremely hard-working and determined member of Parliament and the citizens of Western Arctic are getting extremely good value re-electing him time after time as their member of Parliament.

I was very surprised by the speech of the government member. He is normally a very restrained and thoughtful speaker but today he is out of character. It demonstrates that the government has run up the white flag on this bill. I think it can see that the three opposition parties will be voting together and will have sufficient votes to send it to committee and well it should be because it is a very well constructed and very good bill.

The parliamentary secretary fails to understand his role and the government's role in Parliament. The fact is that the Canadian government or any government for that matter in the parliamentary system survives at the pleasure of Parliament. The parliamentary secretary has one vote in the House as the member for Western Arctic does. This Parliament is a sovereign body. The parliamentary secretary has no right to berate any member of the House for simply doing his or her job. That is what the member was doing.

I was very impressed with the speech by the member for Yukon. He rightly came to the defence of the member to put the government in its place and make the government understand what its role really is.

The member for Yukon pointed out that there is a devolution agreement already in place for Yukon. It separates it from the other territories to a certain degree because there is a different level of authority between one territory and another.

Another issue that we need to deal with is that we are at second reading of the bill. Second reading of any bill is to deal with the principle of the bill. We are not supposed to be spending our time in our speeches going through the minutia of the bill and discussing it clause by clause and point by point. The whole reason for second reading debate is whether or not members agree or disagree with the principle behind the bill.

That is why I argue many times in my own caucus that on second reading if we agree with the principle then we should be supporting the bill. I think, by and large, more often than not we should be voting together in Parliament to support bills at second reading if we agree with the principle.

What the government has done tonight is to simply to say that it does not even agree with the principle. We just had the Prime Minister a few months ago go up to the Arctic and talk about Arctic sovereignty and how we need to spend gazillions of dollars there to keep the Russians at bay and all the other enemies that he sees out there at bay because we want to be able to extend our arguments for sovereignty over minerals and oil exploration as far north as we can.

That is what the bill would do. The bill would facilitate our goal of extending our sovereignty in this country. That is another reason that I am very surprised and disappointed at the parliamentary secretary's response to the bill. The bill does not ask for a lot. It asks that a territory to be able to extend its borrowing capacity.

I want to reference something the member pointed out in his speech, which is that on March 26, Moody's Investors Services gave the Northwest Territories a AA1 rating, which is the second highest rating and places the Northwest Territories in line for credit risk with most of the provinces. This is the second year in a row that Moody's has issued the Northwest Territories such a high rating.

I know how important Moody's Investors Services and all these rating agencies are. These are world-class rating agencies. They rate securities, bonds and governments.

I was a member of the legislature in Manitoba for 23 years and before that I worked as an executive assistant to a minister in the Ed Schreyer government, which was elected first in 1969. Finance ministers of all provinces care a lot about Moody's and the other financial houses in terms of their ratings. They routinely get on a plane two or three times a year and go cap in hand to New York to be interviewed by representatives of these investment houses in order to get that all important good credit rating. They know that if their credit rating slips, the borrowing costs will be a lot more and it could mean a lot of money. This is very good news that the Northwest Territories has the capacity to get a credit rating like this.

The other issue concerns what it is borrowing. Is the federal government somehow lending the money, putting up the money and guaranteeing the money? The member has explained how the territory has always paid its bills and operates very fiscally responsibly. We would wish that the government would do the same.

There is another issue that the territories might look at, if this bill is successful. I think it will be successful with the Bloc, the Liberals and the NDP voting for it. It is just a matter of time before we actually get this bill passed. However, there are a lot of creative financing possibilities and opportunities that jurisdictions and provinces can take upon themselves. I will give an example.

Twenty years ago, in 1986 in Manitoba, the government looked at selling bonds. Some of our backbench MLAs, one of them in particular, one of my former colleagues, suggested in the caucus that we sell Manitoba government bonds, that we sell Manitoba Hydro bonds. Guess what? Two years later, Manitoba Hydro was issuing its own bonds to citizens of Manitoba.

Does that not make a lot more sense than borrowing money in New York or on the foreign market, or perhaps even with a foreign exchange and other currencies? We have all been burned on currency exchanges over the years by borrowing in Swiss francs, Dutch guilders or German marks. What we did, which is what other provinces have done, was take out the bond right in Manitoba. We had Manitobans buying our bonds and keeping the money in the province. The interest on the bonds was staying in the province.

I know, for example, that Air North airlines in the member for Yukon's riding is a big success story. It has its headquarters, its commissary and its flight crews in Whitehorse. It is a real asset to that community. Even its financing is very positive, as far as I am concerned, because it sells shares to people in Yukon.

When I was up there last year, I talked to a person who worked as a server in the local hotel. She is thrilled with Air North because she bought $5,000 worth of shares, she gets one or two free flights a year, and she gets a return on her investment. That is the type of local investment that we want to encourage within our local jurisdictions, and that can be done. It is not the Conservative approach that everything needs to be done through Goldman Sachs and other financial houses on the advice of these houses on foreign markets.

The member who is on the finance committee may laugh about that, but there are many ways to raise funds. We are saying that if we give people a local stake in their enterprises, we will see a much more solid enterprise in the long term.

I have not even begun to go through the notes that I have with respect to this debate. The parliamentary secretary got me to respond the way I did. I really did not expect that kind of attitude from the government. As the member for the Bloc said, I sure hope the government does not have that attitude when the three opposition parties pass this bill on to committee where it belongs.

[Marc Lemay, Bloc, Abitibi—Témiscamingue, QC]

Mr. Speaker, I am not sure if you remember, but I believe you were chair of the Standing Committee on Aboriginal Affairs and Northern Development when we first started talking about a study on the economic development of the north and on the constraints and difficulties that entails. We are just finalizing that study, which began almost two years ago. Like the hon. member for Yukon, I admit I was extremely surprised at the reaction of the Parliamentary Secretary to the Minister of Finance to the request from the New Democratic member for Western Arctic, a request that seemed perfectly legitimate to us.

The advantage of private members' bills is that they require us to do some research, to analyze and try to understand the problem. There is a difference between a government bill and a private members' bill. A private members' bill is introduced to solve a problem to the satisfaction of the party concerned.

In the Bloc Québécois, when we read Bill C-530 for the first time, we wondered what it was all about. We did not know this problem existed. We now realize that one of the main challenges involved in the economic development of the north is the fact that the inhabitants of that region are not autonomous. They cannot develop and have a vision for the future without the government's permission.

It is pure paternalism. Have we had gone back to the days of colonialism? The state steps in and tells the people how to develop the region. It says it cannot lend them a lot of money and that it will wait and see. If we want these territories, Yukon, the Northwest Territories and Nunavut, to take control of their own destiny, then we have to at least give them the chance to develop. One way to do so is to increase their borrowing capacity.

Let us draw a parallel. We have a credit card that we pay off on time every month. The bank or financial institution that issued the card writes to us after six months to say that, because the balance has always been paid, our credit will be increased. It is done automatically.

In a modern society, companies write to us to increase our lines of credit. That is usually what happens. Not only do the Northwest Territories pay their debts, but they also even have a small surplus at the end of the year. In the 2010-11 budget, their projected surplus is $35 million. Their projected income is $1.357 billion and their projected expenditures are $1.293 billion. If that is not an administration that respects itself, takes responsibility and looks after its own development, then I do not know what is.

In short, the Bloc Québécois will vote in favour of sending this bill to committee to be studied.

I would very much like the Parliamentary Secretary to the Minister of Finance to come to the committee to repeat what he said today. I do not think he would dare do so. It is not possible. It is paternalism in the extreme. How can—I was going to say nation, and I will say it—a nation, a territory like the Northwest Territories develop? They have mines. I looked into that because that forces us to work. We have worked. We have done our homework. They have not done their homework. It is clear that the parliamentary secretary has not done his homework.

We just have to look at the expansion plans for the Taltson hydro project. A power plant like that produces electricity. Of course to build it, money must be borrowed. We thought about our own dams in James Bay, in Quebec. We borrowed money to build them, but we have since seen a return on our investment. The Taltson power plant was explained to us. It is a run-of-the-river hydroelectric plant. It uses water that flows through the river. This hydro development on the Taltson River could replace 114 million litres of diesel and 320 kilotonnes of greenhouse gas emissions. Now I understand why the Conservatives oppose the bill. They might no longer be able to sell their oil in the north. If that is why, they should say so. Imagine that. When we hear things like that and read things like that, it does not make sense.

The purpose of the bill is to promote the economic development of Canada's north. The Northwest Territories want development. They want to stop having to come to Ottawa to beg the government, under section 20, for the opportunity to borrow a little more. They will be able to pay it back, but they have to ask permission from their grandfather, their big brother, their great-uncle or someone in Ottawa. I hope this government will understand. That is not the way to develop these lands.

If we want Yukon to address this issue, we need to do exactly what the member for Yukon said in the House. If the Northwest Territories want to develop, they need to do something about it. We will answer questions. We will go to committee. We will bring witnesses forward. We understand that anything can happen, but we cannot refuse and say that we do not want to hear anything about it from the outset. I think that this is an interesting bill. It allows us to put a finger on one of the major problems of economic development in the North. One of the problems that has been mentioned by nearly everyone in the North, including people in the Northwest Territories, is that no one is capable of long-term planning. This bill, if it is passed, will allow them to develop.

We have studied this bill. We said it today and we will say it again. We hope that this bill will go to committee. With all due respect for my colleagues in the governing party, I hope that they will not come before the Standing Committee on Aboriginal Affairs and Northern Development with the same opinion that the Parliamentary Secretary to the Minister of Finance expressed today because they will find their hour before the committee to be very long.

That is why we will make sure this bill is studied in committee.

[Dennis Bevington, NDP, Western Arctic, NT]

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.

Private Members' Business

[The Speaker, Liberal, Peter Milliken]

Before I call upon the hon. member for Ottawa South to ask his question, I would like to take a moment to provide some information to the House regarding the management of private members' business.

As members know, after the order of precedence is replenished, the Chair reviews the new items so as to alert the House to bills which at first glance appear to impinge on the financial prerogative of the Crown. This allows members the opportunity to intervene in a timely fashion and present their views about the need for those bills to be accompanied by a royal recommendation.

Accordingly, following the October 1 replenishment of the order of precedence with 15 new items, I wish to inform the House that there are four bills that give the Chair some concern as to the spending provisions they contemplate. They are: Bill C-449, An Act regarding free public transit for seniors, standing in the name of the member for Hull—Aylmer; Bill C-507, An Act to amend the Financial Administration Act (federal spending power), standing in the name of the member for Saint-Lambert.

There are also Bill C-530, An Act to amend the Northwest Territories Act (borrowing limits), standing in the name of the hon. member for Western Arctic, and Bill C-572, An Act to amend the Parliament of Canada Act (Parliamentary Budget Officer), standing in the name of the hon. member for Ottawa Centre.

I would encourage hon. members who would like to make arguments regarding the need for a royal recommendation to accompany these bills or any of the other bills now on the order paper to do so at an early opportunity.

I thank honourable members for their attention.

Northwest Territories Act

[Dennis Bevington, NDP, Western Arctic, NT]

moved for leave to introduce Bill C-530, An Act to amend the Northwest Territories Act (borrowing limits).

Mr. Speaker, I am pleased to have the opportunity to introduce this private member's bill, as it is another step on the Northwest Territories' road to becoming more like a province.

Currently, the NWT must come cap-in-hand to Ottawa asking for an increase in the amount that it can borrow. Many of the borrowing requirements in the Northwest Territories are for things that are self-financing. Yet, still, this borrowing limit means that we must obtain the permission of cabinet to move forward with these amounts.

We are not content to remain in this colonial position. Our government is strong and has been fiscally responsible for many decades. For years, the federal government has promised the evolution of provincial-like jurisdictions to the NWT but with no action. Because of this lack of action, the natural resources of the Northwest Territories are in jeopardy.

Without the ability to borrow more money, the territory may be forced to privatize certain facilities, like the Taltson hydro project with the expansion to service the diamond mines, something that is a profitable venture for the public government in the Northwest Territories. However, without the borrowing capacity, it cannot participate in this project. The natural resources of the Northwest Territories should go to benefit the people of the Northwest Territories, especially those where the government has taken an active role in developing a project.

This bill and my previous bill to give jurisdiction over new highway construction would make the Northwest Territories more like a province. Step by step, we can achieve what other parts of the country have and we want to move forward.

(Motions deemed adopted, bill read the first time and printed)