The Northwest Territories is about to make its biggest-ever capital spending commitment – in other words, the money the government spends on building schools, hospitals, roads, and so on.
The territory is budgeting to spend $325 million on infrastructure in 2019-20, up from its planned $237 million spend in 2018-19 (although the plan rarely matches up with the actual spending – more about that below).
Most of that increase, Premier Bob McLeod told Cabin Radio, can be attributed to federal infrastructure grants.
These influxes of cash, for big-ticket items like the Mackenzie Valley Highway but also smaller projects across the territory, ordinarily require a territorial contribution along the lines of 25 cents for every 75 cents given by Ottawa.
So when there is more federal money coming in, that means the territorial contribution has to increase too.
More: Read the territory’s spending plans for yourself, in full
Breaks down spending by department and allows you to see individual line items, such as which schools or communities will receive cash
Calling this “the largest capital budget ever,” McLeod said it was a result of his government’s “strategic approach … to maximize as much money as we could from the federal government.”
On Friday, Finance Minister Robert C McLeod told the legislature the new capital plan would direct $118 million to highways, $93 million to social infrastructure, $42 million to energy projects, $29 million to community governments, and $62 million to other projects – which gives a total of $344 million, outstripping the $325 million printed in the territory’s official capital estimates document.
The announcement could raise eyebrows at the Union of Northern Workers, which is preparing to face territorial negotiators in an independently moderated mediation session later this month.
The two sides have spent three years trying, and failing, to reach a new collective bargaining agreement – with the union calling for the territory to trim its infrastructure spending and instead divert cash to workers’ salaries.
McLeod dismissed the suggestion upping the NWT’s infrastructure spend would increase the likelihood of a winter strike.
“Most people feel that it’s very expensive to live in the Northwest Territories. The cost of living is very high and, as a government, we subsidize the cost of living by about $200 million a year already,” he said.
“We spend 70 percent of our budget on social programs. So we don’t have a lot of flexibility, and we know for a fact that by building infrastructure like roads, and airports, and so on, it greatly reduces the cost of living.”
‘A lot of difficulty’
An increased spend on infrastructure comes as the Premier fought off a suggestion from Kieron Testart, the Kam Lake MLA, that government ministers were misleading the public on the NWT’s economic fortunes.
“The public has been led to believe by the Premier and cabinet that the NWT is securely on the right path to a prosperous future,” said Testart on Thursday. “GNWT press releases and ministerial talking points repeatedly insist that our fortunes continue to grow, despite significant evidence to the contrary.”
McLeod told Cabin Radio in response: “He was one of the MLAs that criticized me heavily for being too pessimistic when I came out with the red alert. In my mind, I was stating the facts: our GDP does drop significantly, we’ve also lost about a billion dollars in resource development, we’ve lost 800 jobs.
“A lot of it is due to low commodity prices and the fact that the federal government imposed a moratorium, so we didn’t produce a molecule of oil and gas for almost three years. That’s significantly affected our economy, so I don’t think I’ve been leading anybody into believing our fiscal situation, our economy, is performing on all gears.
“We realize that in some parts of the territory our economy is good, but in other regions there’s a lot of difficulty.”
The finance minister’s address on Friday – while proclaiming modest optimism for the immediate future – made no secret of the territory’s recent revenue issues.
In the legislature, Robert C McLeod stated the territory’s revenues had fallen by $120 million in the past financial year. Premier McLeod said: “We’re counting on it improving significantly this year, because we couldn’t afford to have too many of those kinds of years.”
Alongside the capital plan, the NWT’s politicians also have a great deal of legislation to push through in its final year before the next territorial election.
This point was raised by Kevin O’Reilly, the Frame Lake MLA, in conversation with Cabin Radio last week.
“There has been a real lack of any meaningful legislation coming out of cabinet,” said O’Reilly. “They promised a whole bunch of legislation related to Devolution and we have seen nothing so far. The Premier promised we were going to devolve and then evolve. The evolve part has not happened – nothing.
“The number of new pieces of law that they’ve brought forward is very, very small, compared to other assemblies. We have a huge backlog with a year left, and I’m worried there may be efforts to ram things through without proper public scrutiny.”
Responding to that, Premier McLeod listed 10 separate pieces of legislation currently being worked on and said: “Every legislative assembly that I’ve been involved with has always been in this situation.
“It’s not an exact science,” he continued. “If we could plan a certain amount of the legislation for every year of the four years, that would make it much better.
“But at the end of the day, we have to live with what we’ve got, and every assembly has to prioritize what legislation they’ll put through.”
Legislation expected to come forward includes the establishment of a territorial ombudsperson, changes to student financial assistance, and some alterations to legislation governing how municipalities are run, the NWT’s health and social services, and human rights.
When the biggest is not the biggest
Lastly, a note on what does and does not constitute the NWT’s biggest-ever capital spending plan.
While the territory’s latest budget document commits $325 million to capital spending in 2019-20 – and ministers call it the “biggest ever” – that figure is actually significantly smaller than what the territory is set to end up spending in 2018-19.
The same document suggests the territory now expects to spend $397 million on infrastructure in 2018-19. The same thing happened in 2017-18: the NWT initially committed to spending $266 million, then revised that estimate up to $408 million – a rather ginormous difference.
In other words, you can expect 2019-20’s $325 million to shift substantially, too. Why? The territory says the short answer, again, lies with the federal government.
“We apply for the various funding pots from the federal government and as they are approved the numbers change,” a note from a Department of Finance official read.
“As most of our larger projects are multi-year projects, there are sometimes cashflow issues related to either advancing or delaying a project that get reflected in the revised capital estimates.”