Less than meets the eye

Despite the ritualistic bragging contained within the numerous press releases issued by various Liberal politicans last week, Finance Minister Ralph Goodale’s budget speech still contains less than meets the eye.

Yes, the Paul Martin government did create a few modest scraps of good news for Nunavut and northern Canada.

But with one or two exceptions, there’s not much there.

For example, the budget contains a much-hyped $150-million increase in territorial formula financing over the next five years. Formula financing agreements are the instruments through which Ottawa supplies each of the three territories with the core funding needed to run their governments.

In Nunavut, that’s where nearly all the Government of Nunavut’s money comes from.

In the GN’s main estimates for 2003-04, tabled in March of 2003, the Nunavut government projected that it would get $666.5 million through the formula financing agreement for that fiscal year.

So a little bit of Grade 3 arithmetic will reveal that the $150 million, spread among three territories over five years, doesn’t amount to much.

Assuming that the money will be divided equally among Nunavut, the Northwest Territories, and Yukon, it amounts to only $10 million a year, per territory. This does not meet Nunavut’s needs. Nunavut’s annual expenditures have been rising from year to year at a much higher rate. For example, between 2002-03 and 2003-04, spending rose by about $30 million.

That’s the trend in Nunavut. The amount of money that’s budgeted to be spent every year is always greater than the amount of money that’s expected to be received. Luckily, there are large numbers of unfilled jobs in the GN, and Nunavut has been able to use unspent salary money to cover its annual operating deficits.

But almost all of that unspent salary money has been used up over this past year, mostly on capital projects.

It’s likely that the GN will cut back on capital spending in the coming year, and even think about program reductions and cuts. The extra formula financing money from Ottawa won’t be enough to prevent that from happening.

If the $150 million is distributed on a per capita basis, then Nunavut will get even less.

On the other hand, the $90 million worth of spending on a “northern strategy for economic development” is more substantial. But at best, it still represents only about half of what Nunavut has been asking for.

In its December 2002 proposal for a new Nunavut economic development agreement, Nunavut’s Sivummut Economic Development Group proposed the creation of a $66 million fund for Nunavut over five years — between $12 million and $13 million a year.

But split among three territories, the $90 million in economic development funding will likely give Nunavut only $6 million a year. Again, if that money is distributed per capita, Nunavut will get even less.

Another measure, which exempts municipalities from paying the GST for the next 10 years, will help Nunavut’s cash-poor hamlet governments a little bit.

The announcement that carries the greatest potential for job creation over the five years is the $2.1 billion allocated for the clean-up of contaminated sites for which the federal government is responsible. This represents money that Inuit firms such as the Qikiqtaaluk Corporation, along with its joint-venture partners, could likely use to hire and train Inuit for seasonal jobs on clean-up projects.

To be fair, Ralph Goodale and other Liberal politicans are describing last week’s budget as only the first step in the implementation of a long-term plan. We can only hope that their plan for Nunavut and the northern territories gets a lot richer. JB