Cost of division
Past spending is a key
NNSL (Jul 15/98) - When it comes to dividing up NWT assets and liabilities, the balance sheet is missing one thing -- precedents.
Not only is it the first split of its kind in Canada, there's no global example.
That can mean big challenges when it comes to splitting assets and assigning liabilities.
It also means a measure of controversy over who gets the polar bear.
"Basically, we started at ground zero," GNWT assistant comptroller general John Carter said.
"When we went looking for past precedents internationally, we found that Sweden and Norway divided peacefully in 1905 (and) the Vienna Accord of 1980 helps sovereign nations split."
One of the ironies that emerged from the process was the fact that Canada is not a signatory to the Vienna Accord, Carter said.
Key to determining how the asset and liabilities would be divided is figuring out historical spending in the West and East.
The split arrived at was 56 per cent for the West and 44 per cent for the East based on 10 years of expenditures.
Geography was another key factor in determining asset and liability split.
The GNWT also decided public agencies like the NWT Power Corp., Workers' Compensation Board, housing and development corporations, would be handled individually.
On environmental issues, the GNWT lacks the financial wherewithal to pay for cleanup so an "as is, where is" approach has been taken.
The groups involved must also handle non-reportable assets, like cultural assets and archives, and records. Other assets under this heading include logos, licences, patents and copyrights. For all assets and liabilities to be divided, "we have to make sure it's equitable and everybody is satisfied."
Carter spoke Friday at a Certified General Accountants of Canada annual meeting in Yellowknife.
It was the first time the association held its annual meeting in the North. About 250 accountants were in the city for the conference.
Carter covered accounting methods used to determine how the two territories will divide.
GNWT comptroller general, Lew Voytilla, outlined the dollars involved with division.
He estimates the one-time transitional cost of setting up the infrastructure associated with two new governments to be between $250 million and $300 million.
That includes $150 million approved by Ottawa in 1996 and $136 million in additional costs identified by the GNWT.
The territorial government has yet to hear from Ottawa on the $136 million it has identified in additional costs.
Voytilla said there could be some overlap in the two figures.
As well as the one-time transitional costs, the federal government will contribute $95 for incremental costs associated with division.
The $95 million, announced recently, represents the extra money the federal government will have to pay in 1999-2000 to run the two new governments. That amount will change year to year.