NWT’s new budget is ‘a financial Frankenstein’s monster’

While the NWT’s finance minister says the territory’s newly proposed budget “represents difficult choices” to achieve fiscal goals, not everyone agrees those are the right choices.

Caroline Wawzonek unveiled the first budget of the 20th Assembly late last week, which she described as “not a ribbon-cutting budget.”

Asked to explain what that meant, she said: “There’s a desire – and there’s a drive, often from just the realities of politics – to be able to say we have a new building or a new facility, or we’re hiring someone, or we’re creating a new program. That can lead to a situation where, year over year, you’re always adding new without actually taking a moment to take something back.

“The idea of not being ribbon-cutting is we’re not making a lot of new announcements.”

The budget for 2024-25 features $48.4 million in proposed cuts across departments, including the axing of 91 public-sector positions, 58 of which are currently staffed, and discontinuing the planned expansion of midwifery services in Yellowknife.

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Wawzonek said, however, her budget was not an austerity budget or “making cuts simply for the sake of cuts.”

The proposed budget is roughly $50 million short of the assembly’s new target of saving $150 million annually through a combination of reduced spending and increased revenues. Department spending is still expected to rise by $24 million – an overall increase of 1.1 percent compared to the last budget.

Some MLAs and organizations criticized the cuts and cabinet’s spending priorities.

Among the most vocally critical was Range Lake MLA Kieron Testart, who described the budget as “a financial Frankenstein’s monster” after departments were individually tasked with reviewing programs and services to find cuts.

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He said he would not support the budget without “significant change.”

Cabinet must get the support of enough regular MLAs that a majority of territorial politicians back the budget, otherwise it will not pass. There are seven cabinet members in the 19-member legislature. (The speaker votes only to break a tie.)

“I simply do not believe there’s enough imagination and ambition to move the government forward towards growth and change in the years ahead,” Testart told the legislature.

“We must get this right from the start. We cannot afford to start on the wrong foot and risk the progress that northerners expect from us and elected us to deliver on their behalf.”

A copy of the proposed 2024-25 budget main estimates. Emily Blake/Cabin Radio

Testart said the budget fails to significantly reduce spending to restore balance, while also failing to adequately invest in communities and the assembly’s priorities.

He said, for example, that while housing is a stated priority, Housing NWT’s budget has been reduced by 10 percent compared to last year. He said any new housing units the territory plans to build were commitments from the previous government.

“Using this example, we see a department whose core mandate is essential to realize the top priority of the 20th Assembly prevented from doing so,” he said, “because cuts were mandated by process, and everybody had to chip in.”

Hospital crisis

Meanwhile, Testart criticized a proposed six-percent increase to the health department’s budget without substantial changes to healthcare management.

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“We must get healthcare spending under control and make it both efficient and effective,” he said.

Testart noted the territory spent $4.4 million on agency nurses last year. He called for the government to phase out the use of those nurses by 2026 alongside work to create an environment that attracts and retains healthcare workers.

Health minister Lesa Semmler said she would “rather not” use agency nurses and the territory is working to address healthcare staffing issues.

Semmler said, however, she would not commit to phasing out agency nurses by a set date if it would affect patient health. She said, for example, five agency nurses were currently working in the territory to keep obstetrics services open. She noted closing Yellowknife’s obstetrics department for more than two months in 2021 and 2022 cost the territory nearly a million dollars.

“If we were to close it down, that’s 700 births in the Northwest Territories annually in the obstetrics unit in Yellowknife. Those people would have to travel,” she said.

“If we can’t staff it, that is a priority too. We have to look at all different sides of it and that’s my job, to be able to do that.”

Wawzonek said the finance and health departments are working together to recruit healthcare workers. She said the GNWT has achieved a 20-percent gain in healthcare recruitment but more work is needed to address morale and retention.

Yellowknife North MLA Shauna Morgan, said the territory had “a crisis on our hands” at Stanton Territorial Hospital, the NWT’s main hospital.

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“The staff that remain feel increasingly taken for granted, under-supported. There has been a downward spiral in morale alongside an upward spiral in costs and inefficiencies,” she said.

Morgan proposed establishing a task force to help front-line staff “address the low-hanging fruit causing the greatest frustrations.” She requested the proposal be considered in budget deliberations that will extend over the next few weeks.

‘A blow’ to midwifery services

The Midwives Association of the Northwest Territories is pushing back against a planned $900,000 budget cut that would discontinue an expansion of midwifery services in Yellowknife.

Midwifery services are currently available in Fort Smith and Hay River. The association has long advocated for expanding those services across the territory, which included plans for a Yellowknife hub that would grow the profession with training, mentorship and outreach to communities.

Territorial officials told reporters the GNWT felt expanding midwifery services in Yellowknife was “not valuable” given current usage of the program.

The association said, however, scrapping those plans would threaten the stability of midwifery practices across the territory, particularly at a time when there is momentum toward establishing services in Yellowknife. It encouraged residents to fill out a survey, which has received more than 100 responses, and write to their MLA to support ongoing investment in those services.

“This would be a blow to services intended to reduce strain on a system in a territory where too many have become familiar with the fragility of birthing services – even in the capital – as far too many have been required to deliver too far from home,” the association wrote in a template letter to MLAs.

The association framed the proposed budget cut as choosing not to invest in a system where “a single staff illness” could dramatically disrupt a family’s birth plan in communities such as Fort Smith or Hay River. It added research has indicated midwifery services result in better outcomes for babies and parents and cost savings for healthcare systems.

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Midwifery in the NWT “could take a decade or more” to recover from the funding cut, the letter stated.

Yellowknife's Stanton Territorial Hospital is seen from the Frame Lake trail in September 2022 — Yellowknife’s Stanton Territorial Hospital is seen from the Frame Lake Trail in September 2022. Ollie Williams/Cabin Radio

Great Slave MLA Kate Reid told the legislature no midwives were consulted about the decision.

She said two students studying to become midwives – with plans to work in Yellowknife – likely won’t return to the NWT if the expansion is cancelled. She added they are concerned they may have to pay back bursaries they received from the territory.

“Why are we making short-sighted decisions that reduce services to folks who are giving birth, and reducing options for students who began their studies in good faith that their work would help their fellow northerners?” Reid questioned.

Ahead of the budget, union president Gayla Thunstrom railed against potential job cuts in an opinion piece published by NNSL.

Thunstrom said union members had complained that staff shortages and vacancies were creating unmanageable workloads.

“Providing timely and efficient government services requires adequate capacity and resourcing,” she wrote. “Job cuts put more pressure on workers who are already overwhelmed and burnt out, leading to more turnover and even longer wait times.”

Thunstrom called on the territory to instead cut the money it spends contracting out government work to the private sector.

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Cabin Radio has reached out to the union for comment.

Spending smarter

In her budget address, Wawzonek noted floods and wildfires continue to strain the territory’s fiscal capacity. She said expenditures have historically exceeded revenues leading to growing debt.

At the end of the 2024-25 fiscal year, the NWT government plans to pay off $49 million in debt. Total debt is expected to reach $1.6 billion, $184 million below a federally imposed borrowing limit of $1.8 billion.

The budget does earmark spending for several new initiatives and additional public-sector jobs.

Wawzonek said the territory’s fiscal responsibility strategy aims to fund priorities through existing budgets and resources rather than increasing spending or growing the public sector, which already employs more people in the NWT than the private sector.

“I take pride that this budget is not about what we are spending more on but rather how we are spending smarter,” she said.

Departmental 2024-25 budgets compared to 2023-24: