GNWT seeking more spending ability
Self-financing projects might not count against debt limit
Shane Magee
Northern News Services
Friday, April 24, 2015
SOMBA K'E/YELLOWKNIFE
On the heels of the extra $500 million announced on its debt ceiling, the territorial government may soon be able to redefine most of its existing debt so it can borrow hundreds of millions more.
Finance Minister Michael Miltenberger, left, and Premier Bob McLeod speak during a news conference Wednesday about the federal government's plan to increase the GNWT debt ceiling to $1.3 billion. - Shane Magee/NNSL photo |
The federal government's budget announcement Tuesday proposes to increase the territory's debt ceiling to $1.3 billion. The ceiling is the maximum amount of borrowed money the territorial government can take on and is regulated by the federal government.
The territory expected to be $85.8 million shy of reaching the existing cap without the increase announced this week.
But along with this extra capacity, Finance Canada is also considering whether or not to count so-called self-liquidating debt toward the debt limit, according to Premier Bob McLeod.
That's debt for projects and assets that will eventually pay for themselves.
Deh Cho Bridge debt was cited as an example of debt that's self-financing via tolls on northbound commercial vehicles.
The premier and Finance Minister Michael Miltenberger touted it as a win for the North at a news conference at the legislative assembly Wednesday. The GNWT is calculating just how much of its debt this impacts.
"We are reviewing our books because we think there is a significant amount that is self-liquidating," the premier said. "We've been making this argument for some time. We know for sure the (Northwest Territories Power Corporation's) $200 million debt falls under that category and we know there are others as well."
Power corp. debt is being repaid by its ratepayers on their power bills.
If those millions of dollars are no longer counted as debt, it means there is greater capacity to borrow for other projects.
Weledeh MLA Bob Bromley was cool to the news.
"That's unfortunate, as we have not proven (ourselves) to be able to manage it in a way that is sustainable," Bromley said. "The minister himself has said we have an unsustainable budget."
According to a GNWT summary, several people at pre-budget consultation meetings said the territory shouldn't take on any more debt when the economic outlook includes slow growth and the possibility of diamond mine closures.
Any new borrowing should be for renewable energy projects that bring down the cost of living, Bromley said.
He argued that taxpayer money should not go toward building infrastructure that mainly benefits extractive resource industries.
Those projects tend to only provide temporary employment during construction and Bromley said industry, such as Giant Mine, has been leaving behind more costs for government.
Yellowknife Centre MLA Robert Hawkins didn't know enough Wednesday about the self-liquidating debt announcement but said any increase in the territory's ability to borrow millions more should be approached carefully.
"One should not spend as drunken sailors," Hawkins said.
The ability to borrow more gives the legislative assembly opportunity to consider "nation-building" projects such as renewable energy or highways, Hawkins said.
The changes do not mean the government is about to go on a spending spree, the premier said.
"We've shown that we're very fiscally prudent managers of our money and I don't have any concerns that we're going to go out and blow it all," McLeod said.
The premier said the additional money the government will have access to isn't earmarked for specific projects yet, but will be used for transport and energy infrastructure.
Diesel generators at the Jackfish Power Plant are coming to the end of their lifespan and the city needs additional power capacity, the finance minister said.
With more borrowing capacity freed up, he said the GNWT can look at alternative energy sources to replace it, including liquified natural gas, solar or biomass.
The finance minister said any projects undertaken have to be affordable and allow the territory to maintain its credit rating.
The GNWT sought to have the debt limit increased to $1.8 billion more than a year ago, $500 million more than the limit the federal government announced.
The change in the way debt counts toward the cap is better than getting the full increase sought, McLeod said.
"We think this is very positive, this is very good for the North. We think in the long term this will be an even better arrangement," McLeod said.
