Economy expected to show growth for first time in three years

The economy of the Northwest Territories will show positive growth this year, following two years of decline, Northwest Territories Finance Minister Michael Miltenberger announced in his budget last week.

Miltenberger made the comments Thursday when he released the territorial budget at the Legislative Assembly in Yellowknife. The Government of the Northwest Territories (GNWT) will maintain service levels in the coming year while investing $222 million in capital and housing infrastructure. The funding, the second part of a two-year, $744 million infrastructure investment announced in last year’s budget, was approved by members of the Legislative Assembly in October. A total of $64 million is earmarked for highways and roads; $42 million is set aside for school repairs, replacements and additions; $28 is available for community infrastructure; $24 for renovations and upgrades to GNWT buildings; $17 million for airport infrastructure upgrades; and $4.5 million for hospitals and health care centres. The GNWT will fund the infrastructure investments through an estimated $35 million operating surplus in the coming year and over $89 million in short-term debt.
“The recession, while it seems to be bottomed out and there seems to be some signs of recovery, there’s still a long way to go, “Miltenberger said, explaining while the outlook is positive the NWT will face “on-going challenges” with the economy.  “When we first started as a government we tried to make the right decisions to get started, to give ourselves a strong financial footing. We acknowledged and planned to play a stabilizing role over the next number of years and this budget reflects that continued commitment.”
Revenues are expected to increase from five per cent this year – from $1.29 billion in 2009-10 to $1.36 billion in 2010-11. Operating expenditures will increase nearly eight per cent – up $92 million to $1.29 billion.
Miltenberger said the NWT’s GDP dropped 17 per cent last year, following an eight per cent drop in 2008. Mineral exploration rates dropped 80 per cent from their 2008 levels.  Mining and oil and gas investment intentions dropped to half their 2007 levels last year. While there were positives – including Diavik and DeBeers canceling planned shutdowns due to improved diamond prices – the economic recovery will be slow.
“The cutbacks that we saw have not been recovered from,” Miltenberger told reporters. “There’s still a critical need for us to play that stabilizing role.”
Investments in green initiatives will also continue, with $19 million set aside for the second year of a four-year, $60 million investment in energy vision designed to reduce the NWT’s dependence on diesel fuel. There is also $1.1 million for water-related activities, including: $821,000 for the finalization and implementation of the NWT Water Strategy; $200,000 to help development a system to measure the health of an entire aquatic ecosystem; and $115,000 to help develop tools to protect each community’s water supply.
“The whole plan – to start cutting our costs, reduce our greenhouse gas emissions, renew our greenhouse gas strategy – we’re fully committed to,” Miltenberger said.
Miltenberger said cost pressures on health care in the NWT need to be reduced in order for it to be sustainable. The Department of Health and Social Services is currently working with the different health authorities to develop a plan that will provide dependable and timely access to health care for residents for the long-term. $326 million is set aside for social services expenditures in the current budget – 25 per cent of the GNWT’s operating budget.
“There is an enormous, unrelenting, upward pressure on our costs which, as we attempt to deal with the health needs, reduce our ability to put the funds into other areas,” he said.
The GNWT will also work to develop “a solid, clearly defined, politically tamper-proof” NWT Heritage Fund. Miltenberger first outlined the fund, which would contain revenues from non-renewable resources, in his Strategic Action Plan for 2009-12. He said a public discussion paper on establishing the fund will be released this year, and the legislation to create the Fund could be in place by the end of the 16th Assembly if there is enough support.
The budget also includes $66 million for community governments – an increase of 7.3 per cent over 2009-10. There is also $3.6 million to improve services in remote communities, including: $950,000 for a project to establish Government Service Centres in ten small communities ; $600,000 to improve early childhood education in rural and remote communities by increasing funding for programs and improving access to early childhood consultants; $400,000 to support regional youth sporting events; $450,000 for the creation of three new youth officer positions; and $158,000 to help remote communities reduce drug and alcohol-related crimes and to provide additional training for court workers.
The GNWT will also provide $1 million to increase the number of RCMP officers at remote detachments. The federal government will contribute $500,000. The funding will help bring Northern RCMP detachments in line with a backup policy announced in 2007 following the deaths of Const. Chris Worden in Hay River, NWT and Const. Doug Scott in Kimmirut, Nunavut. A further $121,000 will ensure communities without a resident RCMP detachment receive regular patrols.
Hay River South MLA Jane Groenewegen called the budget was “very, very good” but said she would like to see the GNWT spend less time talking, and more time acting.
“There are very good, experienced, long-time Northerners sitting in this room, and we hear from our constituents who have very good ideas as well,” she said Thursday following the budget address. “I think we need to focus more of our monetary resources on putting things into real action as opposed to spending too much time talking about it.”
While there are no tax increases in the budget, Miltenberger said property tax rates, tobacco tax rates and liquor mark-ups will be adjusted to reflect inflation on April 1.
“We have not laid anybody off, we’re not cutting any programs, and we’re not raising any taxes,” he said.
The Deh Cho Bridge, the Taltson Hydro Expansion project, and the the construction of the Mackenzie Valley Highway remain priorities for the GNWT, Miltenberger said.
“We are going to leave some lasting legacies here that are going to far outlive the short four years of the 16th Assembly.”

Communities along the route of the proposed Mackenzie Gas Project want to see the construction of the Mackenzie Valley Highway prior to any construction commencing on the pipeline, Western Arctic MP Dennis Bevington said following a nine-day tour of the area.

The main focus of his trip, which ended Jan. 12, was to gauge support for the Mackenzie Valley Project along its proposed route, Bevington said.
Bevington met with community leadership, Aboriginal organizations, and Municipal governments in Deline, Tulita, Norman Wells, Fort Good Hope and Inuvik. Bevington had meetings planned in Aklavik and Tuktoyaktuk, but was unable to make it due to the driving conditions on the ice roads. During the meetings, Bevington said he was told two projects need to move ahead prior to the pipeline: a road transportation system from Wrigley to Norman Wells, and another from Inuvik to Tuktoyaktuk.
“Those two … were considered a real priority by everybody to get going on,” he told The Hub on Thursday. “Everybody identifies these projects should start as soon as possible and would be a real asset to the development of a pipeline if these roads were in place. That’s not what the companies say, but that’s what the people say. I think that’s common sense.”
Many communities have developed plans to help mitigate some of the expected social and economic impacts of the pipeline. Bevington said they want to access some of the $500 million set aside in the Social Economic Impact Fund (SEIF) before construction on the pipeline begins. SEIF is a fund set aside by the federal government in July 2005 to mitigate the social impacts resulting from the MGP. Currently the Deh Cho and Inuvialuit will receive $150 million; the Gwich’in will receive $82 million; Tulita and Deline will receive $61; and Kasho Gotine and Colville will receive $57. The funding has been set aside for such things as social wellness, long-term training efforts, and community development.
“These plans are not going to be successful in most people’s minds unless we get going on them sooner rather than later,” Bevington explained. “The federal government’s position that these funds will not be released until construction of the pipeline is guaranteed is not going to be adequate to deal with the way they want to use the money. There’s a very strong feeling that we need to advance some of those funds in the very near future.”
Most of the communities he visited were also pleased with the JRP report on the pipeline.
“People generally felt the report was well-done,” Bevington said on Thursday. “Some people thought it was well-done in that it was cooked too long, but, by in large, they were comfortable with a lot of the recommendations.”
Getting to work on a road network along the valley is something the federal government can begin right away, Bevington said.
They talked about (infrastructure development) being one way to make the project more viable,” he said. “I think people – mostly in the valley – agree. Build some roads there and you’re going to reduce the cost of the development of a Mackenzie Valley pipeline.”