Whatever you do, don’t call it an austerity budget.
Premier Bob McLeod kicked off the takedown of the term that suggests extreme measures in his opening statement on May 31, the first day of spring session. “Like every government before us, we have to take a hard look at what we are spending to make sure our programs are aligned with the priorities we have agreed on, that they are as efficient as possible and that they are still needed,” the premier said.
“This is not austerity, Mr. Speaker, this is simply what responsible governments do to make sure they can continue to afford the programs and services the public needs by trimming and redirecting spending to keep it in line with revenues.”
That sentiment was further echoed by Finance Minister Robert C. McLeod when he spoke to media prior to his budget announcement in the Legislative Assembly the next day.
The result is a budget that proposes $35 million in new initiatives to address the long list of priorities set out by cabinet, all of which were dutifully laid out in the Finance minister’s June 1 budget statement.
Last year’s budget was deemed one of restraint, comparatively investing $24 million in the priorities of the assembly.
“Anytime you look at any type of reduction, it’s going to have an impact.”
That said, the 2016-17 budget, in which $68 million in savings have been located, will aggressively move the government toward its goal of $150 million in savings and new revenue by 2020.
In speaking to the media, Mike Aumond, deputy minister of Finance, was clear about one thing: “If we do nothing, spending will exceed revenue each and every year of our outlook going forward.”
Without some level of restraint, the government would be looking at an operating deficit in 2018-19.
The ultimate goal, Aumond said, is to see the government in a position of cash surplus – which hasn’t happened since around 2010, under the 13th Legislative Assembly.
Getting there would require either an increase in revenue or cuts to spending, and the budget proposes a bit of both.
No new taxes, some new fees
With a limited tax base, there’s subsequently limited value in increasing taxes. Like last year, the new budget does not propose tax increases but does include a number of service fee increases in addition to those that are fixed to inflation and would increase regardless.
Some fees, such as tourism operator fees, are reviewed and increase every year, while others are reviewed on either a two-year or five-year basis. This budget incorporates those five-year fee reviews, forcing a number of increases in the 2016-17 budget.
One area that will see an increase is transportation. The government is looking to turn the Yellowknife Airport into an economic driver, rather than an economic slug that requires a $3-million subsidy each year. Landing and terminal fees, similar to what are charged at most airports in Canada, will come online, as well as an airport improvement fee. That fee will be charged for passengers only – not freight, thereby not tampering with the cost of transporting food – but will amount to an additional $10 for passengers flying north from Yellowknife and $20 for flying south of the airport.
Those charges, in addition to fees for businesses on airport land, are expected to draw in an additional $11 million each year.
Building up the tax base with scholars
One way of increasing revenue is to increase that small tax base, and the budget does allow for a few lines in that vein. Perhaps the most noticeable effort is a $2.2-million investment in the Student Financial Assistance program to not only attract Northerners home after post-secondary, but also to draw other Canadians to the North.
Interest rates on repayable loans for students within the territory are eliminated under the budget and the 20-semester limit under the program is also scrapped.
The government has also proposed a $2,000 Northern Bonus to go toward the student loans of graduates from not just the territory, but those from across the country who reside in the NWT for at least one year after school.
Growing the economy
In several areas, the government is looking to be more “open for business.” There is $1.2 million tagged for the Mineral Development Strategy that supports geoscience research, bolsters the Mining Incentive Program, and assists businesses within the territory to capitalize on the mining sector.
The Western Arctic Centre for Geomatics also sees a boost of $181,000 to its budget, bringing it up to $875,000 in order to provide remote sensing services, such as satellite imagery, out of its Inuvik office. The office opened under last year’s budget, with a startup line of $695,000.
As well, $825,000 will go toward Tourism 2020, aimed at growing the industry through marketing, research, and engagement.
The government also announced the closure of the Mackenzie Valley Petroleum Planning office for savings of $665,000, but Minister McLeod said he does not foresee this impacting a resource company’s decision to do business in the territory.
Considering a trim
Whether through services cut or “sunsetting” – the allowed and foreseen expiration of a program – McLeod admitted some losses would be felt.
“Anytime you look at any type of reduction, it’s going to have an impact,” he said.
The most heavily felt impact will likely come from the potential job loss announced by the government just last week. It was stated that 58 positions would be affected by potential layoffs, but since then 19 of the impacted positions had been accommodated.
As part of forced growth – costs associated with demand-driven programs that the government cannot control – there is always the potential for more jobs to be created, he said.
“We are looking at innovative ways to address crime, such as integrated case management, wellness courts, domestic violence treatment options courts and culturally appropriate correctional programs as part of our commitment to focus on mental health and addictions.”
Still, it has been rumoured that several departments could be merged under the government, and McLeod confirmed that the government is seeing whether there is value in amalgamating and streamlining delivery.
If this is the case, he said further cuts would be considered.
“Everything is going to be considered; absolutely everything within the government system will be considered because we have to take these steps now,” he said.
Homelessness and housing
Perhaps one of the major issues this assembly will grapple with is how to provide housing and services to the territory’s vast homeless population.
Last year, the budget announcement came with a proposal of 75 housing units for residents on income support. This year, the NWT Housing Corp. (NTHC) has targeted 84 units, spokesperson Revi Lau-a confirmed in an email to Northern Public Affairs.
The Housing Corp. provides ongoing funding of $100,000 per year under its Shelter Enhancement Fund, which assists with capital repairs and equipment for shelters and other NGOs that service the homeless population. This year, an additional $316,000 was allotted under the federal budget to go toward the Housing Corp. under this category of repairs and renovations, specifically for shelters servicing victims of family violence.
“Again, addressing any health and safety issues with respect to these shelters is a primary focus of this funding,” Lau’a stated.
As well, an instalment of $600,000 is listed under Transitional Supportive Housing – a new budget line – and, will go toward converting under-utilized space in Yellowknife shelters into semi-independent units. Notably, the Centre for Northern Families recently announced the purchase of a new facility for its daycare, which opens the basement of its existing Franklin Avenue shelter for semi-independent living. (The minister responsible for the Housing Corp., Caroline Cochrane, is the former executive director of the centre.)
Under the Seniors Fund budget line, the department of Health and Social Services (HSS) proposes a $205,000 contribution – the same as last year – which will go toward supporting seniors in successfully living independently.
“We are looking at policy and financial needs for long-term care and dementia beds, developing updated capital projections and building more seniors’ independent housing as part of our commitment to take action so seniors can age in place,” Premier McLeod said in his address.
The Finance minister also said there is some funding from the federal government specifically earmarked for seniors’ services.
Mental health and addictions
With the new Mental Health Act having taken much of the attention during the final term of the 17th Legislative Assembly, the 2016-17 budget includes just over $500,000 to put the new legislation into place.
Several budget lines involve contributions to mental health and addictions services under HSS – including the On the Land Healing Fund and funding for organizations that deliver mental health and addictions programming. In both cases, contributions are the same as last year at $450,000 and $1 million, respectively.
“We are looking at innovative ways to address crime, such as integrated case management, wellness courts, domestic violence treatment options courts and culturally appropriate correctional programs as part of our commitment to focus on mental health and addictions,” Premier McLeod said.
No other specifics on programming were given.
How we’ll get there
Projections show that revenue in the territory is declining by an average of 0.1 per cent annually, while expenditures continue to grow by about 0.5 per cent per year.
Until the final year of the 18th Legislative Assembly – the 2018-19 fiscal year – the government will continue having to borrow money.
This year, the government proposes to borrow $54 million, bringing its debt load up $783 million.
Currently, Aumond said the government is paying approximately $14 million in debt servicing, which would nearly double to $30 million should the GNWT reach its borrowing limit of $1.3 billion set by the federal government.
According to Aumond, that’s a place the government doesn’t want – and can’t afford – to be.
Photo credit: Jean Gagnon (CC)