Northern premiers to Ottawa: check your math, Santa

Nunavut Finance Minister Keith Peterson said a technical glitch that has Nunavut receiving $34 million less than expected next fiscal year should be fixed before he delivers Nunavut’s 2016-17 budget this February. (FILE PHOTO)

Thanks for the letters, Mr. Morneau, but please check your math — because this year, we want more for Christmas.

That sums up how northern Canada’s three territorial governments reacted last week to a math glitch that’s hit them with a nasty surprise set to kick in next April 1 — funding shortfalls equal to about two per cent of their total budgets.

And they’re all complaining about it to Bill Morneau, the new Liberal finance minister.

The federal re-calculation means that in 2016-17, the Government of Nunavut will get only $11.2 million more under the territorial formula financing agreement, or TFF, than they received in 2015-16.

That’s $34 million less than what the GN believes the territorial government ought to get — and its officials aren’t happy.

“These revisions are substantial,” Keith Peterson, the Nunavut finance minister, said Dec. 24 in a statement.

The issue arose after Statistics Canada changed the way it works with provincial and municipal spending data.

That, in turn, changed the factors that federal bean-counters plug into the mathematical formula that Ottawa uses to figure out how much money to give each territory under their respective TFF arrangements.

Peterson said the funding surprise arises from technical changes that Ottawa ought to be able to fix before the start of the GN’s next fiscal year.

“The impacts on TFF are significant; this decrease in funding is an unintentional and unfortunate side effect of the data revision. We believe it can be corrected, and are working with our federal and territorial colleagues to ensure northern Canadians are not penalized by technical changes,” Peterson said.

Unlike Nunavut, the Northwest Territories will suffer a real cut. Under the NWT’s TFF, they’ll get $34.2 million less in 2016-17 than they received in 2015-16.

But NWT Premier Bob McLeod reacted to that news with a conciliatory statement, describing the funding shortfall as an “unintended consequence” of StatsCan’s data revisions.

And he’s not blaming Ottawa.

“The fiscal impact of the technical changes was not anticipated by the territories or the Government of Canada,” McLeod said.

But Darrell Pasloski, the Yukon premier and finance minister, a Conservative candidate in the 2008 federal election, slammed the Liberal government and accused them of breaching the terms of the TFF agreement.

Pasloski described the funding recalculations as “cuts” that will cost the three territories more than half a billion dollars over the next five years.

“Reducing the federal transfers by millions of dollars without any notice is unacceptable,” Pasloski said in a news release.

He also said the funding reductions violate “key principles of stability and predictability” set out in legislation that covers the TFF.

The Yukon will actually get $7.2 million more in 2016-17 than they received in 2015-16. But Pasloski said that’s $23 million less than what Yukon should get.

“A sudden decrease in funding, especially of this magnitude, while we are preparing our 2016-17 budget, violates those principles,” Pasloski said.

As for Nunavut, in a letter to Peterson that Morneau sent just prior to his Dec. 20 to Dec. 21 meetings with territorial and provincial finance ministers, Morneau said Nunavut will get $1.462 billion under the TFF in 2016-17.

Combined with $37 million from the Canada Health Transfer and $14 million from the Canada Social Transfer, that means Nunavut will get a total of $1.514 billion in major transfers from Ottawa next fiscal year.

Nunavut’s total revenue projections for 2016-17 won’t be known until Peterson brings down the GN’s operating budget this February.

But for 2015-16, the GN expected to get total revenues from all sources — TFF, CHT, CST, own source revenues, third-party agreements and prior-year recoveries — equal to about $1.8 billion, a February 2015 Nunavut finance department document said.

That means next year’s $34 million shortfall is likely equal to roughly two per cent of the GN’s expected revenues.

The TFF is the biggest single payment that Ottawa makes to the territories each year. It comes with no strings attached — but for the territories, it’s essential for covering the escalating costs of health, education, social services and local government.

The “formula” is a complicated piece of algebra that takes provincial and municipal spending levels across Canada into account when calculating how much each territory should get.

Bureaucrats with the Nunavut, NWT and Yukon governments learned of the StatsCan data glitch earlier this month, some time before their political masters went public with their complaints.

Morneau referred to those complaints in letters sent prior to his Dec. 20 meeting with finance ministers in Ottawa.

“I understand that you have concerns regarding recent changes made by Statistics Canada affecting the calculation of your Territorial Formula Financing amounts,” Morneau said in each of the three letters.

“I have asked my officials to discuss with yours possible options to address this situation going forward,” Morneau said.