IQALUIT - To no one's surprise in the wake of the Nunavut Housing Corporation's cost overruns, Finance Minister Keith Peterson delivered a 2010-2011 budget with a deficit of $50 million.

Finance Minister Keith Peterson delivered his budget speech at the legislative assembly on March 1, wearing the same pair of shoes he wore last year. The territory will run a deficit of $50 million in the next fiscal year but is making considerable investments in health and education. - Emily Ridlington/NNSL photo

Peterson stood in the Nunavut legislative assembly on March 1 and told members they must plan cautiously and realistically in the upcoming fiscal year.

"We have to stress that we have to live within our means," Peterson told reporters.

His message outlined how the territory needs to be prudent with their spending.

This comes after a year where there was $110 million in cost overruns at the Nunavut Housing Corporation.

"That put a serious dent in our finances, there's only a finite amount of money we have available to us," he said.

The territory's revenue is projected at $1.35 billion, an increase of $89 million. This boost comes largely from the increase in the amount given to Nunavut through the federal territorial formula financing arrangement. This is how the territory gets about 90 per cent of its revenues.

A potential source of additional funds is asking Ottawa for an increase in the territory's borrowing cap.

Peterson said this has been considered and it would allow for some flexibility and help the territory's development. Nunavut is currently borrowing $142 million of a potential $200 million.

A contingency amount of $89 million has been set aside in the budget. Deputy minister of finance Peter Ma said this money is earmarked for things like negotiating the Nunavut Teachers' Association collective agreement, language implementation and potential power rate increases.

It is a tradition for finance ministers when delivering their budgets to sport a new pair of shoes. Peterson wore the same pair as last year, but, like his shoes which were newly polished, there were some bright spots in the budget.

The Department of Education got an additional approximate $18 million in its operation budget of $224 million. The Financial Assistance to Nunavut Students program, known as FANS, will get $2.5 million, $3 million for income support with the remainder $13 million going to get more teachers into the classrooms.

The plan is to get the student teacher ratio down to an average of 14 to 1, and to 13 to 1 at the high school level. This means hiring 50 to 60 more teachers over the next two years.

"The smaller the class, the more attention the teacher can give to that number of students to make it interesting and that the students want to attend," said Murray Horn, director of corporate services for the Department of Education.

Horn said the teachers will come from the Nunavut Teacher Education Program and from the south.

The average current student teacher ratio now stands at 14.5 or 15 to 1.

Amittuq MLA Louis Tapardjuk applauded this move and called it a "required cost."

The Department of Health and Social Services' budget is the largest, ringing in at $296 million, about one quarter of the GN's total annual operational spending. This year the department is getting a $32 million boost. This money will be spent on things like out of territory hospital costs, scheduled medical travel, medevacs, laboratory services and maternal and newborn care.

Peterson said the government will establish the long-awaited independent child and youth representative position, to start in the 2012-2013 fiscal year.

MLAs said they were not surprised by the message included in Peterson's budget.

"I think it was kind of expected because of the housing corporation fiasco," said Tapardjuk.

Tapardjuk said he thinks questions about possible cuts to programs will be answered in the spring session.

"That's really when the questions are coming about infrastructure requirements, the big ticket items will be discussed and who's going to sacrifice a lot of these programs and projects that are underway," Tapardjuk said.

Quttiktuq MLA Ron Elliott said the answer to reducing spending costs lies in better planning.

"We are taking a balanced approach to say we want to not cut services and we want to provide better services and over the next year maybe we will look at better spending," he said.

Elliott said he was pleased to see the government investing in youth and health care.

Nanulik MLA Johnny Ningeongan said if cuts to funding are imminent at the community level, it is not about putting communities up against each other to fight for resources.

"We have to do the best that we can with the budget restraints that we have," he said, adding, "I'm not overly excited about what's happening here; we need to do something in order for the future to look better for all of us."

Peterson said the territory will manage with what money it does have.

"When you're living on a fixed amount of money, you just have to see if you can be efficient with it," he said.

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