Budget 2012-13 Highlights

May 24 2012
  • The first Budget of the 17th Legislative Assembly focuses on restoring fiscal balance while protecting existing programs and services. As the economy continues to recover from the recession, fiscal stimulus is replaced by a return to fiscal sustainability. By constraining expenditure growth, the GNWT will rebuild cash to fund future strategic infrastructure priorities.
  • Last year 1,200 jobs were created, returning to 2008 pre-recession levels. Further, the Conference Board predicts a 14 per cent rise in economic activity and 1,800 more jobs over the next two years. While most sectors of the NWT economy are recovering, GDP remains below the highs reached in 2007. This Budget invests in strategies to address economic challenges over the medium-term and create the conditions to encourage sustainable growth.
  • The 2012-13 Budget proposes operating expenditures of $1.411 billion. This represents an increase of $51 million or about 3.7 per cent over the previous year’s Budget.
  • Total revenues are forecast to increase by $132 million to $1.524 billion, a 9.5 per cent increase over 2011-12 projected revenues. Most of the growth is from an additional $74 million in the Territorial Formula Financing Grant and a forecast increase of $59 million in taxation revenues.
  • The strong revenue growth coupled with restraints in expenditure growth and has produced a $74 million surplus, the first surplus in five years.
  • The 2012-13 Budget returns the GNWT’s capital investment to a sustainable $137.5 million, including housing and community infrastructure. By rebuilding cash reserves through surpluses over the next two years, the GNWT will be in a sound fiscal position to address its infrastructure deficit in two years time.
  • GNWT debt is estimated to reach $656 million at March 31, 2013. Most of the long-term debt is self-financing through a dedicated stream of revenues from user fees or ratepayers. The remainder of the debt is primarily short-term, which rose substantially over the past three years to cover cash shortfalls created by increased infrastructure spending during the recession. Short-term debt is forecast to be $216 million at the end of 2012-13.

2012-13 Expenditure Initiatives

The 2012-13 Budget proposes to invest $34.7 million in new and continuing initiatives:

  • Supporting our People– A total of $19.7 million will be invested in strategic initiatives in 2012-13 to support residents in improving their well-being and assisting them in reaching their potential, including:
    • $2.9 million to improve housing, including implementing the priority areas for actions identified by the recently completed Shelter Policy Review. This funding includes $1 million for improving public housing rent scales and $1.2 million for a new rent supplement for private rentals.
    • $15.6 million to ease the transition for people and businesses to higher electricity rates, by offsetting a portion of the NWT Power Corporation’s upcoming rate increase.
    • $500,000 to establish Child and Family Services Committees in five communities to help communities support children and families in a culturally appropriate manner.
    • $413,000 for initiatives to improve safety and security in our communities, including implementing a Community Safety Strategy and implementing recommendations of the Framework for Action on Family Violence.
  • Supporting our Economy– This Budget proposes $10.7 million in initiatives to support sustainable resource development and economic diversification. These investments will expand the economic opportunities available to Northerners and communities, and include:
    • $643,000 to develop a Mineral Development Strategy that clearly expresses Northern principles and priorities for sustainable mineral development, and addresses challenges faced by the industry.
    • $397,000 to develop a new Economic Development Strategy to identify current and future opportunities for growing and diversifying the economy.
    • $9.3 million for the negotiation and implementation of the final Devolution Agreement, including money for engaging Aboriginal governments and funding their participation in the final agreement negotiations. By giving Northerners control over public lands, resources and resource revenues, devolution represents one of the best opportunities to grow the NWT economy.
  • Supporting our Environment– In 2012-13 nearly $66 million will be spent on protecting the environment, including implementation of environmental protection strategies started in previous assemblies. Budget 2012-13 provides $4.3 million in strategic initiatives to improve environmental stewardship, energy conservation and efficiency and environmental governance, including:
    • $905,000 to negotiate transboundary water agreements to protect territorial waters by maintaining the quantity and quality of water that enters the NWT from neighbouring jurisdictions.
    • $150,000 to renew the NWT Energy Plan to establish priorities and approaches towards energy over the next decade.
    • $800,000 to support the NT Energy Corp. in developing NWT hydroelectric resources and exploring alternative energy opportunities in biomass, geothermal and solar.
    • $850,000 to install biomass and electric boiler systems at the Deh Gah School in Fort Providence and Fort Smith’s Northern Lights Long Term Care Facility. This capital investment will displace 172,000 litres of fuel oil and an estimated 470 tonnes of greenhouse gas emissions annually.
    • $462,000 to provide more timely and effective land administration services by investing in the Regional Land Administration Program.

Revenue Initiatives

Budget 2012-13 contains no new taxes. However, effective April 1, 2012, property tax mill rates, liquor mark-ups and a number of fees were adjusted for inflation. This is in line with the commitment made in the 2010-11 Budget to index taxes and fees to inflation where possible and practical.

Looking Forward

The GNWT’s fiscal strategy going forward focuses on protecting existing programs and services while generating sufficient surpluses to repay short-term borrowing incurred to support the economy over the past three years.

The GNWT’s fiscal strategy will provide flexibility for a larger strategic infrastructure investment plan in two years’ time, including the following priorities:

  • The Inuvik-Tuktoyaktuk highway to support sustainable development in the region, including oil and gas and other resource development, while reducing the cost of living and doing business.
  • A Public-Private-Partnership for a high-speed fibre optic link up the Mackenzie Valley to improve community connectivity and support economic diversification into more knowledge-based industries via the Inuvik Satellite Station.
  • Investments in higher density housing in communities and investments to address the health facilities deficit, ensuring the sustainability of key programs and services.
  • Consideration of hydro initiatives that provide lower-cost and environmentally friendly power to lower the cost of living and doing business in the NWT.

Completing a final devolution agreement provides another great opportunity for growing the NWT economy. By giving Northerners control over lands and resources, devolution translates into decisions and development based on northern priorities and vision. The accompanying resource-revenue sharing agreement will return resource revenues to the North. Every day without a final agreement means another $165,000 of resource revenue leaves the NWT – about $60 million a year.

The GNWT will be seeking Northerners’ priorities in investing for the future while recognizing the realities of the present. Revenue growth over the medium-term is expected to be lower than in the past while cost and demand pressures for services continue to grow. Budget consultations focusing on expenditures are planned for the fall of 2012 to discuss residents’ spending priorities, the best balance between operations and capital spending, and opportunities for savings. Results of the consultations will be used to prepare the 2013-14 Budget.