Inuit orgs must tighten their belts, Nunavut Trust warns

In advance of next week’s Nunavut Tunngavik Inc. annual general meeting in Cambridge Bay, NTI president Cathy Towtongie meets with the Kitikmeot Inuit Association annual general meeting in Cambridge Bay. (PHOTO BY JANE GEORGE)

Bill Lyall, chief trustee of the Nunavut Trust, and Jack Kupeuna, also a Kitikmeot trustee of the trust, speak Oct. 15 to the Kitikmeot Inuit Association annual general meeting in Cambridge Bay. (PHOTO BY JANE GEORGE)

CAMBRIDGE BAY — “Cautious, cautious, cautious.”

That was the advice that Bill Lyall, chief trustee of the Nunavut Trust, delivered Oct. 15 to the Kitikmeot Inuit Association’s annual general meeting in Cambridge Bay.

Nunavut Tunngavik Inc. and the three regional Inuit organizations face at least four years more of belt-tightening, said Lyall, who spoke to the gathering with Jack Kupeuna, also a trustee from the Kitikmeot.

The Nunavut Trust, which for more than 20 years has administered the $1.1 billion in compensation funds transferred to Inuit through the Nunavut Land Claims Agreement, said last December it wanted to change its course.

And, while speaking to the AGM, Lyall, also president of the Arctic Co-operatives Ltd., said the trust now plans to count all its pennies.

To date, the trust has operated with the objective of giving four per cent of its interest earnings each year to NTI.

Those earnings cover most of what it costs to operate NTI and the three regional Inuit associations.

But, while the trust wants to give NTI the “income as they can reasonably afford” to maintain its operations, the trust must protect its own assets from inflation: “both objectives must be met, we cannot sacrifice one for the sake of achieving the other,” Lyall said.

The trust’s only role is to make money and to protect the land claims fund so the capital of the trust remains at the real dollar level of 1990.

So the four-per-cent rate for transfers to NTI will remain in place “as long as circumstances indicate that the trust can continue to pay out at this rate while still achieving its mandate,” Lyall said.

That means no more loans.

For most of the past 20 years, the trust has paid out less than what NTI has asked for and has made loans to NTI and other organizations — but now the trust needs to build up its assets, Lyall said.

If the trust had not paid out more to NTI in the past, Inuit would be $176 million richer today, he said.

The trust’s 2012 financial statements show that beneficiary organizations still owe them more than $100 million in loans made early in their mandate: $62.8 million is due from NTI and $37.1 million is due from the Nunavut Elders Pension Trust.

Information from the KIA meeting shows that over the years, additional cash loaned to NTI amounted to $146,226,437, with $46,793,097 loaned to the elders benefit plan.

Those early loans were originally intended to be repaid soon after Canada had finished making the series of annual payments that were supposed to build the Trust up to $1.1 billion. But repayment never happened.

That means the money due in loans has not been available to invest and earn money for the Trust.

“The long term effects of taking too much out of the trust in the early years are a significant and continuous drain on the probability of success of the trust meeting its target,” Lyall said.

The trust now wants all Inuit organizations to take steps to ensure that does not happen — which may put a crimp in the KIA’s plan to ask for an extra $896,000 this year to balance its $6.4-million budget for 2014/2015.

“Understand the ‘speed bump’ you have put in front of us and support us as we attempt to bring the trust assets back closer to where they should be,” said Lyall, noting that the trust has also trimmed its own operating expenses.

That being said, 2013 was a “huge success with 24.84 per cent return,” so now, as of Aug. 31, $1,440,382,139 sat in the trust coffers, Lyall said.

That’s up from $1,366,029,534 as of Dec. 31, 2013 and the “highest asset level ever achieved,” Lyall said.

But that was an “unusual” return, and is unlikely to repeat itself, he said.

Cathy Towtongie, NTI president, who also attended the KIA annual general meeting Oct. 15, said NTI is also looking at ways to make money through investments for its resource revenue trust, set up in 2012.

That trust contains money the land claim organization earns from mining companies operating on NTI-controlled Inuit-owned lands.

Towtongie once said she hoped to start paying beneficiaries from that trust in 2013.

The Resource Revenue Trust now contains more than $4 million, but Towtongie said NTI wants it to grow to $100 million before any payouts begin.

NTI is set to discuss Nunavut Trust and other financial issues when NTI holds its AGM next week in Cambridge Bay.