Nunavut mulls increase in its credit limit

Nunavut finance minister Keith Peterson speaks with reporters during the annual territorial budget lock-up March 1. Peterson said the Government of Nunavut is considering a formal request to the federal government for an increase in the territory’s $200-million debt cap. (PHOTO BY CHRIS WINDEYER)

Finance officials with Nunavut government are mulling whether it’s time to increase the territory’s $200-million debt cap.

“All I know is $200 million is a figure that is difficult for us,” finance minister Keith Peterson told reporters during the territorial budget lock-up March 1. “We’re already at $150 [million], $155 million of that cap.”

Nunavut has a long list of major infrastructure projects that it can’t afford to pay for up front and can’t currently borrow to finance because of the debt cap.

“A higher cap would offer us a bit more flexibility with what we want to do to develop this territory,” Peterson said.

But the cap is a creature of the Nunavut Act, the federal law that lays out how the Government of Nunavut is structured and operates.

Changing the amount Nunavut can borrow would require an order-in-council, a directive from cabinet that wouldn’t require a vote in Parliament.

Peterson said he’d have to meet with Jim Flaherty, the federal finance minister, to determine a new ceiling for the cap.

Peterson said March 1 he doesn’t have a specific figure in mind.

Premier Eva Aariak has also raised the issue with John Duncan, the northern affairs minister.

She wouldn’t say how receptive Ottawa is to the idea, nor would she specify how much of a cap increase Nunavut is looking for.

“We’re not concentrating on the numbers right now,” Aariak said March 2.

She said increasing the debt cap is one way the government could build some of the big-ticket infrastructure it can’t currently afford.

That list includes major airport upgrades in Iqaluit, Rankin Inlet Cambridge Bay and Pangnirtung, and a hydroelectric dam near Iqaluit.

The GN has also made it clear it’s open to public-private partnerships to fund major projects it considers necessary.

“Our territory is growing very fast and we have tremendous needs for infrastructure,” Aariak said.

But in question period March 2, South Baffin MLA Fred Schell said he’s concerned that the government could end up taking on too much debt.

In an interview, Schell said he’d accept a modest increase in the cap, because it hasn’t changed from its $200-million limit since 1999.

Adjusting the figure for inflation would be okay, he suggested. If inflation since 1999 was factored in, that would increase the cap by almost 29 per cent, or $58 million.

“As long as they don’t go crazy and double it or something,” he said.

But Schell said he’s opposed to the government taking in more debt to cover capital expenditures.

He compared increasing Nunavut’s debt cap to getting a higher credit card limit.

“If you had a $20,000 (limit) you might go out and buy things or do things with it that maybe you shouldn’t have done.”