Housing sector to get help from GNWT

Finance Minister John Todd loosens purse strings, announces incentive program for new home buyers in 1998/99 budget.


Nunatsiaq News

IQALUIT – The infusion of $40-50 million into a new home-ownership program should alleviate the immediate demand for housing in the North, Finance Minister John Todd said during his budget speech Thursday.

Todd expects the new Accelerated Home Ownership Program, part of the GNWT’s budget for 1998/99, will result in the construction of about 1,000 new housing units over the next two years.

“If we don’t put new housing into the marketplace, it compiles an already difficult social problem,” Todd said. Getting more northerners into their own homes should free up public housing for lower-income families, the minister explained.

Tabling the 1998/99 budget in the Legislative Assembly this week, Todd announced the government’s second consecutive balanced budget. That means that for fiscal year 1998/99, the GNWT foresees total spending and revenues at $1.161 billion.

The GNWT also anticipates a small surplus for the fiscal year 1997/98 and a reduction in the NWT’s accumulated deficit, though Todd cautioned that the government’s net fiscal position could be affected by the results of current negotiations with the Union of Northern Workers regarding pay equity.

The GNWT finished the 1996/97 fiscal year with an accumulated deficit of $41 million.

Capital works projects

The GNWT proposes to spend up to $100 million over the next two years on new capital works projects. The GNWT fell behind in public infrastucture spending when it reduced its investment in schools, hospitals and roads from $200 million to $140 million to balance previous budgets.

The legislative assembly will identify projects in March. These projects are expected to be completed through public-private partnership arrangements.

“This additional investment should be possible without increasing our overall annual spending levels,” Todd said.

The finance minister also introduced a new tax credit which should make investing in northern businesses more attractive.

“With the shrinking government dollars and the transfer payments coming from the feds, you need to find a new way to top up the pot,” Todd said. “I’m of the belief some of that has to be taken up with the private sector.”

The tax credits are an incentive for the private sector to market newly issued shares of NWT businesses for sale to territorial residents. It’s also an incentive for investors to purchase shares of new or expanding NWT businesses.

New tax credit

Under the program, investors would be allowed to reduce their territorial income tax by up to 30 per cent of the value of their investment in eligible NWT businesses ¬ to a maximum of $100,000.

The program also allows investments to be made through registered retirement saving plans.

For example, an investment of $10,000 would mean a NWT tax credit of $3,000. The program would allow a maximum of $1 million in credits this year, increasing to $5 million in the year 2000.

The four investment areas under the program are:

* Labor-sponsored mutual funds for unions and employee associations which invest in new and expanding businesses in the NWT;
* Employee-sponsored venture capital funds for employees who purchase shares in the companies they work for;
* Community-endorsed venture capital funds for the private sector to establish small mutual funds that in turn invest in new/expanding businesses;
* Private new common shares sales for direct sale of shares in new/expanding NWT businesses to NWT taxpayers.

Todd announced he expects a small surplus in 1997-98 and a reduction in the accumulated deficit. This prediction, however, may change depending on the outcome of the pay equity negotiations. The GNWT may end up paying as much as $70 million.

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