Harper wants offshore issues discussed at later stage

Nunavut and the federal government have overcome an impasse on devolution discussions, says Premier Paul Okalik, although it's still unclear when talks will begin.

At least the two parties are talking. Until recently, Okalik used words like "hypocritical," "unjust," "impractical," and "colonial" to describe the federal government's position on how devolution – the granting of province-like powers to Nunavut over its lands and waters – should happen.

At issue was whether Nunavut should control waters more than 12 miles offshore, which Okalik says are the territory's "internal waters," but is considered by the federal government to be within its jurisdiction. These waters are of interest because more than $1 trillion in oil and gas is believed to lie beneath the seabed of the High Arctic.

Naturally, Nunavut wants to claim royalties from this oil and gas, if it's ever extracted.

Stephen Harper, the prime minister, offered a way forward to Okalik in a letter dated Feb. 25. He wrote devolution talks will begin by dealing with "onshore, non-oil and gas resource management," and leave offshore oil and gas discussions to be dealt with later.

Okalik accepts this approach, which he describes as a "significant change in position on Canada's behalf."

Harper's letter states his government remains committed to "improving and devolving governance."

The quality of Nunavut's governance, or lack thereof, is highlighted in the Mayer report, the federal government's blueprint for how devolution talks should be handled.

The report, prepared by Montreal lawyer Paul Mayer in June 2007, says the Government of Nunavut's workforce is already badly strained. Many employees are young and inexperienced, and vacancies and turnovers of staff remain high.

Mayer describes the challenge of adequately staffing the government as "monumental," and he predicts it will only get worse if Nunavut is given additional responsibilities.

As evidence, Mayer pointed to a number of public embarrassments for the GN, including the loss of accreditation for Baffin Regional Hospital, the mismanagement of the annual sealift resupply, and administrative disarray discovered at the motor vehicle office.

This was written before Canada's auditor general, Sheila Fraser, pried into the workings of the Nunavut Business Credit Corp. last autumn and discovered widespread mismanagement. Her findings produced the biggest political embarrassment in Nunavut's history, and prompted speculation that devolution talks may grind to a halt as a consequence.

Not so, according to Harper's letter.

But there's still no sign of when talks will begin. Federal officials are still "scoping" – that is, deciding exactly what should be included in a devolution agreement.

Preparation for devolution started in late 2004. It's been one of Okalik's pet projects – he said then he wanted a devolution deal within the life of his government. With a territorial election expected this autumn, that's now highly unlikely to happen.

The benefits of devolution also remain unclear. Okalik has said "devolution will reduce our dependency on federal transfers and help Nunavummiut achieve a standard of living comparable to that enjoyed by other Canadians."

But it's hard to see how this is valid. A Nunavut throne speech once claimed Nunavut loses "hundreds of millions of dollars" each year through lost royalties that are collected by the federal government.

But, as Mayer tactfully pointed out in report, "this amount does not appear to be borne out in reality."

In fact, the federal government loses money operating its lands and resources offices in Nunavut.

The federal government is entitled to royalties from mines on Crown land. But almost every mine expected to open in the next decade is on Inuit-owned land, where royalties and lease payments flow to Nunavut Tunngavik Inc. or to regional Inuit associations.

Okalik has also argued devolution would get rid of red tape and encourage more mining companies to do business in Nunavut. But most regulatory confusion is created by the labyrinth of quasi-governmental organizations spawned by the land claims agreement, called institutions of public governance, that companies must navigate. It's not clear how a devolution deal would change this.

What devolution would do is likely transfer at least 120 jobs from the federal government to the GN, most of them professional or technical in nature, and therefore difficult to fill. That's no huge advantage for a government that has enough trouble filling vacant seats already.

As for the promise of untold riches buried beneath the seabed of the High Arctic, even with $100 a barrel oil, most observers believe these oil and gas deposits won't be explored for decades.

But even with few discernible benefits in the short run, Okalik has clung to the dream of securing a devolution deal as his political legacy. Indeed, it likely prompted his most famous words, although he probably hopes they aren't the ones he's remembered by.

He aimed those words – "f-king bitch" – at Lynda Gunn, the CEO of the Nunavut Association of Municipalities, during a trade show in Labrador last summer. His remark made national news.

Okalik later publicly apologized and said he was having a bad day.

But Gunn and others suspect his anger arose from the NAM daring to tangle with him over how mining royalties acquired through devolution would be divvied up.