Former NWT minister Katrina Nokleby says the territorial government’s sale of bonds worth $180 million this week happened with little to no oversight.
As first reported by Bloomberg, the territory issued the bonds earlier this week. The bonds allow investors to loan the territory money, which is then paid back with interest over time.
Tuesday’s sale was not the subject of a news release from the territorial government. Bloomberg said the sale raised $180 million from bonds due in September 2051 (the date by which the money and interest must be paid back).
“The GNWT has quietly taken on $180 million in new debt,” the Great Slave MLA wrote.
“This was never raised to my recollection while I was on cabinet. Nor am I aware that regular MLAs were consulted. Future generations of NWTers will be paying for this for decades to come.”
Reached by phone on Friday, finance minister Caroline Wawzonek – who was among MLAs to vote Nokleby out of cabinet in August – said the sale should have come as no surprise.
“It was in my budget speech,” Wawzonek told Cabin Radio. “It wasn’t quiet at all. No one asked me about it.”
Wawzonek’s budget address, delivered in February prior to Covid-19’s onset, appears to contain no mention of bonds.
The speech did, however, more broadly contemplate the NWT’s need to take on more debt.
“Our debt level is approaching the federally-imposed borrowing limit,” said Wawzonek at the time, “and current projections show that we will be over the limit by 2021-22.
“We have the fiscal capacity to handle higher debt levels and discussions are under way with Finance Canada to raise the limit to provide more flexibility for long-term planning.”
Four months after that speech, in June, Ottawa obliged and increased the NWT’s debt limit from $1.3 billion to $1.8 billion. The $180-million bond issuance this week is understood to count toward that limit.
Katrina Nokleby, left, and Caroline Wawzonek attend a chamber of mines briefing on the NWT’s economy in late 2019. Ollie Williams/Cabin Radio
Wawzonek said the bonds had been issued to take advantage of an attractive interest rate. Bloomberg reported the bonds were priced to yield 2.23 percent, which is the return an investor can expect.
Government bonds are generally considered a stable if low-yielding means of investment as the investor is highly likely to get their money back.
Sales tax would hit cost of living
Speaking to Cabin Radio on Friday evening, Wawzonek again said the territory had no intention of introducing a sales tax.
The Department of Finance had earlier said the potential of introducing such a tax would be a discussion item among MLAs in the next month, but Wawzonek issued a statement a day later insisting no plan to launch a sales tax existed.
Wawzonek, who took over from Nokleby as industry minister while retaining her finance portfolio, said a sales tax could earn the NWT government some $20 million annually but would have too punitive an impact on the cost of living.
“If you gain on one side, you lose on the other very quickly,” she said.
“We have a lot of [other] levers we can pull. It’s a matter of tying to create an environment where you can innovate, grow businesses, and recycle dollars in the North.”
However, Wawzonek acknowledged her next budget – which must take into account funding for a new Covid-19 Secretariat – would be unlikely to depart too far from those of previous years.
“This is probably a budget that’s going to be fairly status-quo, but I want to really take a deeper dive into finding efficiencies, being innovative with what we’ve got,” she said.
“I do think we can find a better way of doing budgets.”
Asked if the new secretariat would place additional strain on her ability to deliver a budget, Wawzonek said: “I don’t like spending money on Covid, but that’s the reality the entire world is facing.
“Back when Covid exploded onto the scene, it required an emergency response. Departments were just going out and getting the work done.
“To me, it’s an opportunity to actually be organized about this. We can’t be running this off the side of our desks. You need someone running the thing. Southern Canada is in a bad situation right now. It hasn’t gone away, we need to respond.”