Opinion
Chris Windeyer

GNWT Budget: We’re Kinda Screwed

As we head towards a cliff, the guy driving the car spins his wheels

On EDGE | Opinion

Even by the stilted, hidebound standards of budget speeches, Finance Minister Michael Miltenberger’s offering yesterday was pretty dull.

The most oratory verve was found near the beginning, where, in an attempt at invoking an epic timeframe, Miltenberger measured the time since this government has taken office in days—1,197 to be exact. Holy Moses, it’s also been 310 days since devolution, an act which “rolled up 5,000 kilometres of red tape” by patriating resource management authorities from Ottawa. It’s worth pointing out that this metaphorical measurement is not a useful metric for gauging the real impact of devolution.

Magic keeps the lights on

The raw numbers: Miltenberger announced a surplus of $147 million on revenues of $1.83 billion and expenditures of $1.68 billion. Despite $40 million in new revenues courtesy of devolution (a more useful measurement), Yellowknife still gets 68 percent of its budget from the federal government. The notion that the NWT is in surplus is basically a contrivance of fiscal federalism, but it’s one that keeps the lights on.

The budget proceeds to disappoint pretty much everyone. If you’re of the left, $14 million in new social spending and $4 million for energy efficiency might seem like weak sauce. Although Julie Green of Alternatives North did tell CBC’s Elizabeth MacMillan that the government’s move to allow different departments to collaborate on individual casework files is a good idea.

If you’re conservative, you won’t be happy about a $34.6 million increase in spending, including $24 million in new program spending. Nor will you be particularly happy about modest efforts to reign in spending: $23 million from wrapping up obsolete programs and $12.6 million in cuts to department spending.

Amber Ruddy from the Canadian Federation of Independent Business mused about this on Twitter: “Instead of increasing borrowing limit, [the] GNWT needs to control operating costs. Hint: wages, salaries, and benefits of government employees.” There’s a case for more belt-tightening, but there are two problems with that: a lot of NWT businesses rely heavily on government spending (disclosure: including this one); and no government in the country is politically self-destructive enough to pick a fight with the public sector unions in an election year.

Self-hammering

Tax revenues are shrinking, and the government got hammered last year with $55 million in forest-fire fighting costs. It also hammered itself with the political decision to spend $20 million to head off a rate hike by NTPC, which had to burn extra diesel thanks to low water levels in the Snare hydro system last year. The debt cap remains at $800 million (more on that in a minute), and the government has about $70 million left to spare. “We are approaching the edge of a cliff and our challenge is to ensure that we do not go over,” said Miltenberger, the guy who’s been driving the car. At least he’s not sugar-coating it.

And this is why this year’s budget is such a drab affair. The NWT is basically still in recession. Sure, the economy grew 5.2 percent last year (according to government figures) and is on track to grow 3.7 percent this year.

But as Miltenberger notes in his own speech, the economy is 80 percent of what it was before the financial collapse of December 2007. Mining grows modestly but struggles with high operating costs and has yet to reap the regulatory benefits of deregulation. Petroleum is facing several lost years thanks to high costs and low prices. There’s $5.2 million for economic development programs for fishing, film, and small business, the benefits of which will likely be marginal, particularly without a growing primary industry to underpin the whole thing.

No sale

Miltenberger said the government is prepared to spend money on wholesale improvements to the territory’s electricity system in the event Ottawa grants the GNWT’s request for a billion-dollar expansion of the debt cap. “These investments are critical economic infrastructure that will lower the cost of living, use environmentally friendly alternative energy sources, minimize our reliance on the use of diesel, and help create the conditions for economic growth,” he said. But without that extra credit in hand, Miltenberger is unable to realistically budget for any of those projects.

Perhaps it’s no wonder then that Premier Bob McLeod continues to pursue the lofty dream of an transportation and energy corridor from Alberta to the Arctic Ocean. Without some kind of megaproject, the GNWT won’t even come close to hitting its goal of boosting the population by 2,000 souls and scoring $60 million in extra transfer payments.

The problem with that, of course, is that if the Harper government—self-declared boosters of all things Arctic—hasn’t ponied up the massive amounts of cash required to fund such a venture by now, it’s highly unlikely they’ll change course now, with the collapse of oil prices currently blowing a hole in Ottawa’s own bottom line.

So all told, this is one of the gloomiest territorial budgets in recent memory. There’s an old chestnut about the business of professional sports teams: you’re either selling wins or you’re selling hope. Right now the GNWT is selling neither.