The NWT’s finance minister says the territory’s projected annual surplus has been slashed amid global geopolitical and economic uncertainty alongside extra costs related to things like wildfires.
The territorial government’s latest budget forecast an operating surplus of $170 million. That surplus isn’t simply stashed away – most of it is used to build infrastructure, so a large surplus is seen as an important source of cash for new buildings, roads and so on.
On Friday, finance minister Caroline Wawzonek said the latest estimate for that surplus is down by $154 million to just $16 million.
She attributed that to extra spending on the likes of:
fighting wildfires and disaster recovery;
cash for schools to replace lost Jordan’s Principle funding and account for extra costs from a new teachers’ collective agreement;
more housing, including transitional housing and shelter costs;
fish plant operations in Hay River; and
“further subsidies to shield ratepayers from electricity price spikes stemming from low water levels.”
The NWT’s total debt is now expected to reach $1.862 billion, up $90 million compared to earlier projections.
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“In response to the level of ongoing uncertainty, we are modifying our fiscal strategy,” Wawzonek told the legislature.
“The previous fiscal strategy aspired to increase operating budgets through a combination of new revenue generation and expenditure management to decrease short-term debt and increase fiscal capacity so that the GNWT could continue to respond to expenditure shocks.
“Unfortunately, significant economic disruptions were upon us even sooner than anticipated.”
Wawzonek said the GNWT is now switching to an approach of “investing in the stability and resilience of the territory.”
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“While these goals will increase debt, we are careful to ensure debt remains affordable and that these investments provide long-term economic benefits,” she said.
“Even with a shifting of our formal fiscal strategy, fiscal responsibility and sustainability remain key pillars for the GNWT.”
What this shift will mean for future spending, and where that spending might come, were not immediately made clear.
Wawzonek said the federal government’s focus on nation-building and Arctic security should prove a major benefit to the NWT as diamond mines wind down their operations.
“I have long said that I remain optimistic for the Northwest Territories’ potential future and that remains true now, in particular with changes coming on the national landscape,” she said.
“The federal government is looking north and seems to be sincerely hearing the calls from leaders across the Territories.”
‘We stand unprepared’
Speaking moments later, Range Lake MLA Kieron Testart called on ministers to “act now” regarding the decline of mining.
“We need a new red alert, a red alert over our mining industry,” he said, calling back to a message issued by former premier Bob McLeod in 2017 over the federally issued moratorium on Arctic oil and gas development.
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“The North’s economy was sent into shockwaves when the Ekati mine stopped open-pit mining earlier this summer. Hundreds of jobs were lost. The economy is at risk of losing its most significant private-sector contributors through Ekati and all the mines,” Testart said.
“Mining contributes 24 percent of the NWT’s GDP and if you add in the spin-offs to the larger economy, it exceeds 40 percent.
“This should not be a surprise that the mines were eventually going to close. All mines do. But we stand completely seemingly unprepared for this.”
Denny Rodgers, the Inuvik Boot Lake MLA, pointed to the Mackenzie Valley Highway and natural gas development as longer-term solutions.
The Arctic Economic and Security Corridor, which would connect the North Slave to Nunavut’s Arctic coast, has made a tier-two list of projects the federal government says it is interested in developing.
Rodgers said the Mackenzie Valley Highway, which the GNWT has spent decades pitching to Ottawa and continues to push, needs to remain “our number-one priority.”
“It’s good for the entire Territories, not only for defence and for sovereignty, but as an energy corridor as well,” said Rodgers.
“We talk about mines closing down. We’re sitting on 19 trillion cubic feet of natural gas in the Beaufort Delta. We’ve seen the Indigenous government in that region, the Inuvialuit, starting their own development.
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“Not only would that provide energy security within our own Territories, but also the revenue and royalties that come with that to make us more of a ‘have’ territory, and we’re not sat here during budgets fighting over the small amount of revenue that we do have.”
Return of ‘Métis Churchill’
Richard Edjericon, the Tu Nedhé-Wiilideh MLA, said the unity necessary to fully benefit from federal investment “remains overshadowed by the lack of resolution on the Akaitcho land claim and self-government agreement.”
“The absence of this final agreement is not only denying my constituents the recognition and rights they deserve, but also holding back the economic progress of our entire territory,” Edjericon said.
“What my people feel is holding this process back is a lack of urgency and vision from the government to finalize this crucial process.”
Premier Bob McLeod stands in the main chamber of the NWT’s legislature. Pat Kane/Pat Kane Photo
Robert Hawkins, the Yellowknife Centre MLA, called for the return of ex-premier McLeod in some form, dubbing him “the Métis Churchill.”
“We could bring back people like Bob McLeod,” said Hawkins, “who can talk about what would change the narrative.”
Hawkins said he often thought McLeod was “off the page” while McLeod was premier. (Hawkins was an MLA during the first of McLeod’s two terms leading the territory.)
“I’m prepared to eat my hat today,” he said.
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“Ten years ago, he said [preserving the mining industry] was important and some of us gave him a hard time, but it’s turning out it was true. He turned a page way ahead of us.”
Responding to Hawkins’ call for an independent committee on the future of mining – one that he said might include McLeod – industry minister Caitlin Cleveland said she had “long been a fan” of the former premier.
Even so, Cleveland said, cabinet was working together (minus Bob) to tackle the present-day issue and meetings with industry were happening on a regular basis.
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