Panel urges more funds to fix Nunavut’s problems

SARA MINOGUE

The federal government officially got the message this week: Nunavut needs more money to provide education, health care and services that other Canadians take for granted — and it needs more money, fast, to fix “some serious problems.”

That message was delivered in the final report on territorial formula financing, prepared by an expert panel organized by Canada’s provincial and territorial leaders.

“I was pretty happy with the report,” said Finance Minister David Simailak.

The report calls for changes to the funding formula that would result in an extra $53 million for Nunavut and the Northwest Territories in 2007-2008.

It suggests more base funding; additional funding based on population growth; a simpler formula to exclude money raised locally through taxation; and a review of spending needs and the higher cost of providing public services in Nunavut.

Resource revenues, the report suggests, should not be included in any calculations.

That makes little difference now, as the federal government gets most of the money from any mining projects, but it could make a tremendous difference once a devolution agreement is finalized, and Nunavut is managing its own resource revenue. Any money then earned through natural resource extraction would not be automatically deducted from the annual federal grant.

The report suggests abolishing a move in 2004 that offered each of the three territories a fixed funding base plus an extra 3.5 per cent, starting in 2006, to be shared amongst the three territories.

Scrapping that system could put an end to the situation where “we as the three territories have to fight over that 3.5 per cent increase among ourselves,” Simailak said.

In addition to suggesting changes to the way essential public services are funded, the report also points to a need for money outside of the regular grant to fix “serious health and social problems” related to poor housing, education and infrastructure.

It recommends the territorial and federal governments collaborate on a review of the specific needs in Nunavut, and make plans for funding solutions outside of the funding formula.

If the new formula is adopted, the Nunavut government could see $880 million from the federal government in its 2007/2008 budget, rather than the $827 million the old formula would have supplied.

The report was delivered to federal Finance Minister Jim Flaherty this week.