Being ‘more realistic,’ NWT now promises to build less each year
The NWT government is shrinking its annual list of big infrastructure projects because, in past years, many of the promised items simply didn’t get built on time.
Each fall, the territory produces a list of projects in a document called the capital estimates. In recent years, this list has grown and grown. The last one reached just over half a billion dollars – a record, by most measures.
But the GNWT physically cannot find enough workers or manage enough projects to complete half a billion dollars of work in one financial year. “It’s very unlikely that we’d be able to spend that entire amount, just given the capacity of the government and the NWT,” said Bill MacKay, the territory’s deputy minister of finance, on Tuesday.
In reality, the territorial government on average gets work done each year worth about $226 million – a far smaller sum.
As a result, much of the promised work ends up being pushed off to future years and projects don’t happen when the territory said they would.
What was the point, then, of promising to spend $502 million in 2022-23 if the GNWT knew it would struggle to build at least half of that?
Caroline Wawzonek, the minister in charge of procurement, told reporters her government had realized that from the start but had to get through two years of Covid-19 before changing a longstanding approach – “right-sizing” the budget, in her words.
MacKay said past territorial governments had found themselves trying to spend federal funding secured for all manner of projects within time limits mandated by Ottawa, leading to projects piling up.
Talks with the federal government resulted in an agreement that the NWT can have more time to spend that cash in future, MacKay said, helping the GNWT to revise its process and worry less about shoving federal cash back out the door.
Some projects delayed
The territorial government says the result is a new approach to big infrastructure spending.
The 2023-24 list of projects is far smaller than the $502 million produced for 2022-23. The new list adds up to $328 million instead, of which $183 million is federal cash.
MacKay says the new list is “achievable” and will also lead to less borrowing over time, compared to the previous approach.
But reducing the number of things the GNWT promises to build comes with a range of consequences.
For example, a number of projects now won’t get built when the territorial government originally said they would – even if those original promises were out-to-lunch unrealistic, given the lack of workers to do everything.
That’s because the GNWT has had to spread out all of its existing projects to avoid them stacking up in one year.
An example is the transmission line from the Taltson hydro system to Fort Providence, Kakisa and Dory Point. That power line is now expected to be complete by 2025, a two-year delay, because the territory says its new approach suggests the project simply can’t be done before then, given the available workforce and every other competing priority.
In the legislature, Wawzonek said her government was “moving, not cancelling” some projects. Planning cash will be made available to try to kickstart projects like the Great Bear River Bridge, Colville Lake school and some long-term care facilities.
“In short, projects that have lingered on the books – but are not advancing – will now see a better focus placed on problem-solving and planning so that they can, in fact, be ready to advance,” Wawzonek said.
‘This is a better way’
Smaller-scale annual work, like highway maintenance and other community projects, won’t be affected, MacKay said.
Larger projects, though, will now have to compete for a smaller number of annual slots, as the GNWT tries to remain realistic about what can be accomplished.
There is also a concern that committing to a smaller amount of work each year means the territory’s infrastructure deficit – the amount of ageing infrastructure, from roads and schools to power plants and airstrips – will never be solved.
But Wawzonek said promising the earth in one year, as had happened up till now, did nothing either to avoid delays or address ageing infrastructure.
“When we’re planning more than we can do, we’re signalling that we’re not doing very good planning,” the minister said on Tuesday.
“This is a better way of demonstrating to prospective investors, credit organizations, the federal government, and our own local businesses that what we are planning is going to get delivered upon.
“There is more transparency as to what we actually have on the list – and more accountability, in my mind … This is us taking some steps to say what are we really going to do, so we can held accountable for doing it.”