Finance minister Caroline Wawzonek says the Northwest Territories’ latest budget is “not flashy” but instead focuses on “consistency and patience” with a sustainable approach to spending.
The NWT government released its proposed budget for 2022-2023 on Tuesday afternoon, pledging to not cut any programming or add new taxes, while limiting new spending. Wawzonek said the main theme throughout is “doing as much as we can with what we have.”
“I am optimistic that we can control future spending through internal savings and continuing to find more value from the $2.1 billion that we spend without having to reduce programs and services,” Wawzonek told MLAs during a budget address in the Legislative Assembly.
“The financial hardship faced by many residents and businesses and the ongoing economic uncertainties owing to the fall out of Covid-19 make this not a time for increasing income taxes to improve our fiscal situation.”
When last year’s budget was first introduced, finance officials cautioned that the approach of focusing on stability would not be fiscally sustainable in the long-term and action was needed to ensure efficient borrowing room remained for the next Assembly.
While the newest budget does not offer drastic changes, finance officials said limited new spending alongside an anticipated increase in revenues will lead to a better yet still challenging financial position. William MacKay, deputy minister of finance, said the plan is to “ensure this Assembly doesn’t tie the hands of the next Assembly.”
The 2022-2023 budget proposes limiting forced growth to $10 million and spending on new initiatives to $5 million annually.
Finance officials stressed that government renewal is ongoing, an initiative aimed at scrutinizing government programs to ensure available funds are used more efficiently. By the end of this fiscal year, it is expected that an inventory of government programs will be completed.
“Not all things that we do, and should do, need new money,” Wawzonek said.
“Improvements from within, and without new money, has been our approach as a first resort.”
The minister pointed to the territory’s integrated service delivery initiative and recommendations from a working group focused on reducing red tape as examples of work that doesn’t require additional resources.
The third budget of the 19th Legislative Assembly forecasts a $131-million operating surplus, with revenues expected to increase by 2.3 percent from the previous budget, due largely to higher federal transfers. Spending, meanwhile, is pegged at $2.1 billion, an increase of three percent from 2021-2022, which includes $95 million for the Assembly’s key priorities.
Wawzonek said the territory plans to use the operating surplus to help fund capital projects. But that money won’t be able to cover all of the costs, meaning the NWT government will still have to borrow money.
The territory is expected to end 2021-2022 with a total debt of $1.5 billion which is projected to climb to $1.7 billion by the end of 2022-2023 and continue increasing gradually over the next five years. While the territory inches closer to its debt ceiling of $1.8 billion, finance officials insist the debt is under control.
“It is increasing but it is manageable,” Wawzonek told reporters.
There are other financial worries as the territory’s diamond mines age, inflation rises, limited economic growth is projected in 2022, and some sectors of the economy are still struggling to recover from the pandemic, particularly tourism. But Wawzonek said overall, the territory’s economy is recovering and the territorial government is working to promote innovation while providing necessary support.
“There’s a lot of good news to be had in here but there’s certainly a lot of things that I’m looking at and having a healthy amount of worry, but not too much,” she said of the budget.
While the territory is not proposing any new taxes in 2022-2023, property mill rates and some fees that are tied to inflation will rise, while the carbon tax rate is set to increase to $50 per carbon-equivalent tonne of greenhouse gas emissions. Carbon tax revenue will be returned to NWT residents and businesses through rebates and the cost of living offset.