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NWT still owes $175M for Deh Cho Bridge, will be paying till 2046

The Deh Cho Bridge, over the Mackenzie River, is a vital road link from southern Canada to the NWT.
The Deh Cho Bridge, over the Mackenzie River, is a vital road link from southern Canada to the NWT.

The NWT’s Deh Cho Bridge was initially supposed to cost $169 million. Eight years after the bridge was completed, the territory still owes $175 million.

The bridge’s eventual cost ballooned to $202 million through a series of construction delays and difficulties. Budget documents released on Tuesday show the territory has paid barely an eighth of its construction cost to date.

This year, the NWT government plans to reduce the sum it owes for the bridge by just $400,000.

A senior Department of Finance official at a Tuesday budget briefing told Cabin Radio the territory expects to be paying for the bridge until the year 2046.



The existence of the debt and the huge cost of the bridge are not news, but the decades of remaining payments are an illustration of why the NWT is so close to its federally imposed debt cap.

Budget 2020:
Headlines – minister expects NWT to take on more risk
Detail – what’s changing and what’s new

Ottawa currently lets the NWT government borrow $1.3 billion. By the end of the 2020-21 financial year, the territory expects to reach $1.2 billion.

That’s still $100 million away from the limit but, given the NWT ended up borrowing $68 million more than it expected in 2019-20 alone, the cushion is considered too close for comfort at the Department of Finance.



Finance minister Caroline Wawzonek is already in talks to get the cap raised, allowing more borrowing – and more spending on infrastructure projects the territory believes to be vital.

“It comes down to making the investments in infrastructure that we want to make and not getting too close to the debt wall without having a plan,” Wawzonek told reporters on Tuesday.

She believes Ottawa will place faith in the NWT as the territory has a good credit rating and can handle more debt without breaking its own financial responsibility policy.

The NWT could, in theory, use its operating surplus each year to pay down the debt. In 2020-21, the territory expects a surplus of $203 million that could write off the Deh Cho Bridge debt at a stroke.

However, Wawzonek says the stagnant economy means now is the time for her government to keep spending – as she put it, “using our debt wisely to advance the mandate priorities we have.” Which means investing the surplus into infrastructure, as the territory has done for many years.

“The NWT has the oldest infrastructure in Canada [and] some of the lowest social indicators in Canada,” the finance minister said. “We are going to need to make some strategic investments soon in a way that fits with the federal government’s mandate as well as ours.

“With an economy that’s pretty stagnant, it’s not the time to start paying down your debt aggressively. That is not part of the fiscal planning right now. We need to be focusing on growing our economy and bringing people into the North.”

Interest rate risk

Payments on the Deh Cho Bridge debt are expected to grow bigger in the near future as the repayment terms evolve over time, a senior finance official said.



Meanwhile, the territory owes $130 million for the building of the new Stanton Territorial Hospital; $129 million for the under-construction Tłı̨chǫ all-season road; $73 million for the Mackenzie Valley fibre-optic link; and $204 million for a range of older power-related projects.

Those are all considered long-term debts. The territory also owes $533 million in short-term debt, a figure it expects to improve slightly to $494 million by the end of 2020-21. (Just a year ago, the territory owed only $334 million in short-term debt.)

NWT government projected debt 2020-21

A page from the NWT government’s Budget 2020 binder shows projected debt for the 2020-21 financial year.

While the Department of Finance says the level of debt is still well within financially responsible norms – and the territory can handle more – Tuesday’s budget documents do contain a warning of what might happen if interest rates go up.

“As debt increases throughout the outlook, the risk of higher interest rates becomes a concern,” one government document states. “However, debt risk is considered to be low because debt servicing costs are expected to absorb less than five percent of total revenues over the outlook.

“If rates increase, more interest will be paid on the current stock of debt, increasing debt service payments and decreasing the amount of money available for programs, services, and infrastructure investment.”

If the NWT successfully launches huge projects like the Taltson hydro expansion or Slave Geological Province highway, those infrastructure costs could, like the Deh Cho Bridge, linger on the books for many decades to come.

Unless the federal government can be persuaded to drop its insistence that the territory find $25 for every $75 paid by Ottawa, even one or two new projects costing hundreds of millions of dollars would force the NWT closer to a debt of $2 billion or more.



“We want to maintain the debt at a level that is manageable,” Wawzonek said on Tuesday.

Drawing a parallel with a residential homeowner, she suggested taking out more debt to build the territory was the right way forward – if the repayments can be met.

“As long as you’re maintaining your mortgage payments,” she said, “your mortgage in and of itself is not necessarily a bad thing.”