Ottawa windfall reduces GN deficit

Thanks to a $49.2 million adjustment to its formula financing agreement with Ottawa, the Nunavut government will scrape through its next fiscal year with a projected deficit of only $13.4 million.

In her first budget speech in the legislative assembly this past Tuesday, Finance Minister Leona Aglukkaq said the $49.2 million windfall is due to new information from Census Canada about how many people lived in Nunavut between 1999 and 2003.

Plugged into the complex arithmetical formula used to figure out Canada’s annual grant to the Nunavut government, that produced an extra $49.2 million, which was applied to last year’s 2003-04 budget. The GN then finished last year with a manageable deficit of $29.2 million, and a lower deficit for the coming year.

“I would say our financial position is healthy. We have our challenges, naturally, especially in infrastructure, which is our one big issue,” Aglukkaq told reporters at a lockup just before her budget speech — her first as Nunavut’s finance minister.

Wearing a brand-new pair of kamiks made by 69-year-old Mamie Ekalukpik Oniak of Kugluktuk, Aglukkaq told MLAs that Ottawa does not give Nunavut enough money for infrastructure.

She said that although recent changes to the formula financing agreement — the deal with Ottawa that provides the GN with most of its money — are producing more dollars for Nunavut, they don’t allow the GN to make big investments in basic infrastructure.

She said Nunavut officials have presented the federal government with a “business case” that shows why Nunavut’s annual grant from Ottawa is only enough to pay for short-term spending on operation and maintenance.

The Nunavut Association of Municipalities said essentially the same thing, but using much stronger language, in a press release issued this past Wednesday.

NAM says that Nunavut is “slowly coming apart at the seams,” and said the lack of infrastructure money in this week’s GN budget should be a wake-up call for the federal government.

“The careful bricks laid by the founders of Nunavut — to build Nunavut — are crumbling at an exponential rate,” NAM president Johnny Ningeongan, the mayor of Coral Harbour, said in the news release.

NAM also pointed out that Nunavut’s municipalities received no increases to the core funding they get from the federal government, but should consider themselves fortunate not to suffer from funding cuts, given the GN’s $13.4 million deficit.

Nunavut Tunngavik Inc. reacted to this week’s GN budget by repeating demands that Ottawa give the territorial government more money for Inuit employment and training.

NTI, the GN, and the federal government have been locked within a tough set of implementation negotiations aimed at providing the territorial government with more money to carry out the Inuit employment provisions within Article 23 of the Nunavut land claims agreement.

Federal negotiators have been unwilling to meet demands from the GN and NTI that Ottawa provide between $10 and $20 million worth of training money during the life of the next 10-year implementation contract for the land claims agreement.

“Inuit are getting impatient with this stalling,” James Eetoolook, NTI’s second vice-president, said in a news release.

Aglukkaq said in her speech that the Qulliq Energy Corp., the new name for what used to be the Nunavut Power Corp., will charge power customers more money, through a “fuel stabilization rider” that will be added to power bills.

The Auditor General of Canada, Sheila Fraser, warned in a report tabled this week that the Nunavut Power Corp. badly needs more revenue, and should have raised its rates during the last legislative assembly.

Because fuel prices are rising sharply, the power corporation must pay more to buy the fuel it uses to generate electricity. To cover those costs, the corporation is supposed to add “fuel riders” to its bills.

But to protect consumers from the impact of those higher power bills, Aglukkaq said the Department of Finance will create a new $10 million subsidy program.

It’s not clear though, how the fuel stabilization rider will affect Nunavut’s cash-poor municipalities, which have complained in the past about how electrical power rates affect their budgets.

The GN will kill its “education tax,” a small component of the property tax that home and business owners pay every year.

The government will also raise the food component of income support payments by 10 per cent.