Nunavut to run small deficit to cover social needs: Akeeagok
Persistent “social deficit” undermines health, well-being, finance minister says
(UPDATED, 4:40 p.m., May 28)
The Government of Nunavut will run a small deficit this fiscal year to cover much-needed spending triggered by a “persistent social deficit,” Nunavut Finance Minister David Akeeagok said today.
In a speech that ended early this afternoon at the Nunavut legislature, Akeeagok unveiled the GN’s main operating budget for the 2018-19 fiscal year.
“Our revenues are not growing at the same pace as our programs and services. We’re going to need to do something about it,” Akeeagok told reporters at the end of a pre-speech lockup.
While the budget doesn’t “immediately” address this imbalance, “it’s something we’re going to need to work on,” he said.
The GN expects to receive $2.177 billion in revenues this year, and plans to spend about $1.86 billion on programs and about $197 million on capital projects, with $30 million set aside for contingencies, budget documents said.
That will generate a “fiscal planning deficit” of $28 million. With some accounting adjustments, that could lead to a deficit of $54 million by the end of the fiscal year.
Akeeagok said the annual growth rate in transfers from the federal government has declined over the past five years, and the territorial government has never caught up with a “social deficit” that dates to 1999.
“There were long-standing deficits in all these areas at the time of Nunavut’s creation—and the underfunding has continued. This persistent social deficit undermines the health, well-being and advancement of Nunavummiut,” he said in his speech.
In the budget lockup, he explained that in the past, the GN would sometimes underfund programs to create small surpluses on paper.
“There has been a lot of underfunding. To project a surplus for the sake of projecting a surplus is not reality,” Akeeagok said.
For example, the 2017-18 budget for the fiscal year that just ended projected a small surplus of $2 million.
But at the end of 2017-18, the GN likely ran an actual deficit of about $39 million, which will be confirmed in about a month, Akeeagok said.
The GN’s perennial deficits occurred mostly in the departments of Health, Justice and Family Services, he said.
To fix that, the Department of Health will get new base funding to better cover demands for medical travel, mental health and addictions services, Akeeagok’s speech said.
The Department of Education will get new base funding to take into account a new collective agreement between the GN and the Nunavut Teachers’ Association, and the Department of Justice will get new base funding to “address a systemic salary deficit.”
For the Education Department, the 2018-19 budget includes $11.9 million more for 40.5 “new” teacher positions in Nunavut and $1.4 million to staff a new school in Igloolik.
Many of those teaching positions already exist, said Heather Moffett, director of corporate services with the Education Department. That’s because the Department of Education was actually paying for many teachers by using money meant for the salaries of unfilled positions within the Department of Education.
These funds will see only 3.5 new teacher positions actually added to the GN’s roster of teachers.
Last year, Nunavut’s former finance minister, Keith Peterson, warned the territorial government can expect to see federal transfers cut back in future years.
So Akeeagok said Nunavut will look at cutting “ineffective” programs, including the fuel tax rebate, which will be replaced by a new fund.
Those cuts will be done following a process called “program review,” in which GN officials take a close look at which programs work and which ones don’t.
In the past, such program reviews have not produced results. “In previous governments you see program reviews that haven’t resulted in reductions.”
But this time, the GN is serious, Akeeagok said.
“We are asking ourselves where we can cut and where we can increase our revenues,” he told reporters.
Highlights in this year’s budget include:
• $22.7 million more for income assistance, to ensure the food allowance portion comes closer to covering the shortfall between what clients receive and the actual cost of living.
• $13.5 million to increase the capacity of the GN’s information technology infrastructure, in anticipation of getting more bandwidth.
• $5.8 million to expand Nunavut’s tuberculosis prevention and control program.
• $3.3 million to help mining exploration companies work with communities. This program will replace the fuel tax rebate.
• $1.8 million to develop a cannabis harm-reduction program and to train health care providers in communities.
• $1.5 million to enable the use of two operating rooms at Qikiqtani General Hospital at the same time and for longer hours, to alleviate Nunavut’s surgery waitlist.
On the current inadequacy of social assistance food allowances, there’s a 32 per cent shortfall in food allowances given out by the Department of Family Services, compared with the cost of a standard food basket in Nunavut, said Sol Modesto-Vardy, an assistant deputy minister in the Department of Family Services.
Over the next three years, the GN wants to close that gap by 23 per cent.
Those improvements to the GN’s income support program will be community specific.
Right now, Qikiqtarjuaq suffers the largest shortfall in income support compared to real food costs—at 43 per cent, she said.
With files from Beth Brown.