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New BIP rules rile contractors

MLAs, Chamber concerned

Northern News Services

Yellowknife (Aug 27/03) - Changes to the government's business incentive policy are getting a rough reception from builders, business and regular MLAs.

The Northwest Territories Construction Association, the president of the Yellowknife Chamber of Commerce and MLAs on the Standing Committee on Accountability and Oversight have gone public with their concerns over recent changes to the business incentive policy (BIP).

NNSL Photo

Economic Development Minister Jim Antoine: accused of doing a 'flip-flop.'

"There are a number of problems with the changes," said Keith Houghton, chair of the BIP committee for the construction association.

The $1 million cap on construction projects will not allow the incentive to flow through to smaller subcontractors, said Houghton.

"A large Northern contractor with a $1-million BIP cap will use up that incentive within their own forces," he said.

"That is exactly opposite to what the government said it wanted," he said.

Houghton accused Resources Wildlife and Economic Development Minister Jim Antoine of doing a flip-flop by announcing changes despite a commitment to re-examine government plans.

"He turned around and because he's not running again, he made the changes anyway," said Houghton.

Chamber president David McPherson said the caps on the BIP are part of the new policy but said the bigger issue is that the Government of the Northwest Territories (GNWT) increasingly ignores the policy.

"The BIP is only used by government when it suits them," said McPherson, explaining the territorial government does an end run around the policy whenever it decides to sole source a contract.

McPherson says recent self-government agreements could provide regionally-based incentive programs, similar to the BIP and be discriminatory toward Yellowknife-based businesses.

A memorandum of understanding between the GNWT and the Gwich'in commits the territorial government to award 50 per cent of contracts to Gwich'in-based businesses. It's a recent and blatant example that the GNWT does not want to adhere to its own BIP, said McPherson.

"Self-government is the final nail in the BIP coffin. Each region is getting ready to put in contracting incentives," he said.

"We feel that strategy will be a balkanization of contracting services and it's happening in everything. Devolution is breaking down BIP."

Frame Lake MLA Charles Dent, chair of the Standing Committee on Accountability and Oversight, was also upset over Antoine's reversal.

"They're capping it ... they said it costs too much, well prove it, they haven't," said Dent.

He argued the current BIP brings more people and more investment into the NWT and added federal transfer payments provide $17,000 for every person living in the territory.

Under Dent's scenario, the government would receive $544,000 for 32 people.

Dent explained that on a $2 million contract, 10 jobs might be created, supporting 3.2 people per family and 32 people overall. The BIP cost on a $2 million contract would be $300,000. Dent argues the math shows -- to the tune of $244,000 -- that there is a net benefit to keeping the BIP the way it is now.

"If we get rid of the BIP we can never get it back," said Dent.