Public money steps in to plug gap in NWT capital spending
Preliminary numbers from Statistics Canada show the extent to which public money was pumped into the NWT’s economy as private spending plunged in the past year.
The new figures show public capital investment in the territory increased by $268 million from 2019 to 2020 as private expenditure dropped by nearly $200 million.
As a result, public money made up a far larger share of overall NWT capital spending in 2020 than in any other recent year.
The extent to which the shift was due to the Covid-19 pandemic is difficult to precisely estimate.
Jeff Barichello, the NWT’s economic statistician, said projections from the start of 2020 suggest public bodies had already planned to increase spending on projects, while private businesses were already anticipating spending less.
Public capital investment includes municipal, territorial, and federal funding for things like roads or new buildings (as opposed to operational spending like, for example, most functions of the Covid-19 Secretariat). Private investment includes corporate-led spending like mine development.
Statistics Canada’s capital spending figures provide a high-level overview of spending in each industry but aren’t broken down by project.
The drop in private investment largely comes from the mining industry, where investment in the NWT peaked in the mid-2010s with completion of the Gahcho Kué diamond mine. That figure has declined annually since.
“I do know, in 2021, that the pipeline that goes out of Norman Wells into Alberta – they do plan to do some work and that’s offsetting some of the reduced activity at the diamond mines,” Barichello noted.
Projections for 2021
Looking ahead to 2021, capital investment in the NWT is expected to increase to $896 million, up 13.4 percent on 2020’s preliminary figure.
That’s the second-highest increase, by percentage, in Canada – second only to the Yukon, which expects to increase capital investment by 20 percent. The average across the country’s provinces and territories is seven percent.
If it comes to pass, the increase would restore the NWT to 2017 and 2018 levels of capital spending, but with a much, much larger chunk of that coming from government. In both 2017 and 2018, the majority of capital spending was driven by the private sector, but the 2021 projection suggests more than 70 percent will now be public money.
In 2021, nearly $650 million is projected to be invested by the NWT’s public sector while $247 million is expected to be invested by the private sector.
The largest changes by percentage are coming to the retail trade industry, which is expected to see a 33 percent increase, equivalent to $2 million; and to the accommodation and food services industry, which is projected to decline by 37 percent – also around $2 million.
Mine expenditures are projected to trend downward by nine percent, to approximately $93 million.
Paul Gruner, president and chief executive of the Det’on Cho Corporation – the Yellowknives Dene First Nation’s economic development arm – said the majority of the corporation’s revenue continued to come from mining.
“As we are seeing more of the capital spend going to public, this is another reason why we need to look at an Indigenous procurement policy,” Gruner said by email.
The NWT government has launched a review of its procurement on the back of calls, particularly from Indigenous-owned enterprise, for a policy that directs more government spending to Indigenous operators.