Listen Live
HomeNewsHay River NewsNWT budget: Money for now but a tougher outlook ahead

NWT budget: Money for now but a tougher outlook ahead

Finance minister Michael Miltenberger has delivered a 2015-16 budget which invests $24 million in new initiatives but points toward tighter times ahead.

Total revenues for 2015-16 are forecast to be $1.83 billion, a 0.6% decrease on the territorial government’s revised estimate for 2014-15.

However, the NWT still forecasts an operating surplus of $147 million.

“I think the territory’s prospects are challenging but we’re post-devolution, we have a chance to build the territory,” said Miltenberger.

- Advertisement -

Read: Michael Miltenberger’s full budget address

Highlights: The GNWT’s budget highlights document (pdf)

The finance minister, delivering his seventh budget, emphasized the need for the NWT to constrain operational expenditure while investing in large projects to build the economy.

“There are mines that haven’t developed yet that are on the drawing board. If we invest in economic infrastructure, it can only stand us in good stead,” he said.

“We’re building the North. It’s not like we’re sitting here, a basket-case, with no prospects and nothing to look forward to, running a maintenance budget.”

The government’s $24 million for new initiatives comes from a mix of new money and ‘reprofiled’ funds moved across from previous schemes that are ending.

Priorities include anti-poverty measures, early childhood development and programs dealing with addictions and wellness, alongside extending the government’s commitment to developing the territory’s economy and seeking energy alternatives.

- Advertisement -

Operational expenditure will increase by $34.6 million in 2015-16. Almost 72% of the increase in the territory’s operating budget is dedicated to social programs.

Budget commitments include:

  • $1.12 million to support early childhood development programs, including increased wages and training for staff
  • $646,000 for officers in each of the territory’s five regions to help income support clients find work
  • $1 million to expand midwifery services to the Beaufort Delta
  • $1 million to support the host of the 2018 Arctic Winter Games (either the South Slave or Inuvik)
  • $1.5 million in support for the Great Slave Lake fishing industry
  • $4 million to reduce reliance on non-renewable energy sources, including $400,000 on LED streetlight conversion and money for a wind power feasibility study near Inuvik
  • $175,000 for a feasibility study regarding a new liquefied natural gas plant in Yellowknife
  • $3.34 million to “complete devolution implementation”, including $1.15 million to help plug holes where departments have found “activities necessary that were not initially identified”
  • $1.75 million to support the territory’s mineral development strategy
  • $2.5 million to enhance delivery of French-language services and communications

Cuts of $12.6 million have been made across government departments, through efficiencies like reductions in travel budgets rather than closure of programs.

There will be no new taxes, other than the standard increase in line with inflation.

Read: Decision on NWT’s borrowing increase ‘imminent’

Read: NWT announces study into Arctic oil pipeline, roads

Miltenberger said this budget’s focus on social programs would pay a financial, as well as community, dividend.

“Every baby that’s born healthy is a huge, huge downstream savings,” he said. “That’s why we continue to invest more money in prevention.

“If we have the wellness court and divert 10 people from going to jail, at 200 dollars a day or whatever it is, to me, that’s a savings.

- Advertisement -

“We need economic development but if we don’t make some changes … there will never be enough money to fix everybody once they’re sick, to cure everybody once they’ve got cirrhosis of the liver.”

The territory’s longer-term outlook suggests more challenging times lie ahead.

In the immediate future, Miltenberger says the territory will almost certainly be unable to preserve a $100 million ‘cushion’ beneath its current $800 million borrowing limit.

That cushion took a hit last year as the government had to cover the cost of the territory’s worst-ever fire season, then chose to invest $20 million to keep residents’ power bills down over the winter. This year, Miltenberger anticipates the cushion may only reach $86 million.

The forecast for years to come is more concerning. The NWT’s operating surplus is forecast to shrink from $147 million this coming year to $13 million by 2019-2020, with revenues flatlining and expenditure increasing.

In simple terms, that means less money available for new, large infrastructure projects – which have been a central plank of government strategy in recent years.

Even if the federal government grants the territory’s request to increase its borrowing limit by a billion dollars – from $800 million to $1.8 billion – the NWT’s fiscal responsibility policy means that additional billion cannot be used as a “magic wand” to pay for infrastructure.

The government’s scheme to find 2,000 residents by 2019-2020 would bring in around $60 million a year in additional revenue, if successful. But officials suggest other revenues still need to increase substantially – or expenditure decrease – for the government to sustain future, large-scale infrastructure projects of the kind to which it is currently committed.

Moreover, while the finance minister stressed his preference for increasing the tax base (i.e. bringing in more people) over raising tax rates, there is the prospect of higher taxes – or program cuts – in future if the outlook does not improve.

“We have to keep squeezing,” said Miltenberger. “That’s a challenge this government has had and the next government is going to have to pick it up as well.

“In the future, other expenditure management options may need to be considered.

“We are spending everything that we receive. We are approaching the edge of a cliff and our challenge is to ensure that we do not go over.”

- Advertisment -
- Advertisment -
- Advertisement -

Continue Reading

All