Premiers back new territorial money proposal

Canada’s provincial and territorial premiers said yes last week to a new way of calculating how much money Ottawa gives territorial governments each year, an endorsement that pleases Nunavut Premier Paul Okalik.

“I’m really grateful to my colleagues for recognizing this,” Okalik said.

Premiers met in St. John’s, Nfld. last week at the Council of the Federation, the institution they created in 2003 to handle their annual meetings.

Though they failed to agree on a new way of structuring the federal government’s equalization program for provinces, they easily endorsed the creation of a new formula financing system for territories.

They also declared that territories “should be the prime beneficiaries of their resource revenues.”

This also pleases Okalik, because it supports Nunavut’s desire to get a healthy share of royalty payments — through future devolution talks — from mines operating within the territory.

Ottawa introduced formula financing to the territories in 1985. Under it, territorial governments received a big grant every year to make up the difference between the amount of money they’re able to raise on their own and the amount of money they actually need.

In 2004, Paul Martin’s former Liberal government replaced that system with a new scheme called the “New Framework.”

Under the New Framework, Nunavut, the Northwest Territories and Yukon split $2 billion of Ottawa’s money among themselves in 2005-06. After that, Ottawa grants are to grow by 3.5 per cent a year.

Though the GN did receive more revenue under that arrangement, it’s still not enough.

That’s because the GN’s spending, most of it forced by rapid population growth and the territory’s serious health and social problems, is increasing by about 7 per cent a year.

“We could be in serious financial shape if they aren’t listening in Ottawa and the minister’s meetings are unsuccessful,” Cambridge Bay MLA Keith Peterson said in the legislative assembly this past December.

A new proposed territorial funding system supported by premiers last week would revive the old formula financing scheme, but contain a better way of figuring out the territories’ needs and could increase in step with population growth.

Okalik said last week that he hopes new funding deals can be worked out with the federal government this fall, in time for incorporation into the 2007-08 budget year.

In their own report on equalization and territorial financing, the Council of the Federation said that Nunavut should be treated as a special case, requiring large amounts of special financial help from the federal government outside of any new territorial formula financing agreement

“It is clear to the panel that the long-term development of Nunavut will require a considerable catch-up effort to provide the most basic social and economic infrastructure,” their report said.

As for devolution talks between Ottawa and Nunavut, Okalik said he’s still waiting for Jim Prentice, the DIAND minister, to work out a negotiating mandate with cabinet and to appoint a federal negotiator.

Okalik said the delay in getting devolution talks started isn’t bothersome to the GN, so long as Prentice emerges with “broad mandate” to negotiate with.