Jennifer McPhee
Northern News Services

Iqaluit (Feb 25/02) - The federal auditor general is warning that Nunavut may have to cut programs if it runs up a large debt.

"In the face of pressures to increase spending, Nunavut will need to carefully consider what programs are needed and which ones it cannot afford," says Sheila Fraser's recent report.

Nunavut planned to be $12 million in debt by 2002. But favourable changes in the funding formula last year mean the territorial government is still running a surplus. The government is now reviewing all programs inherited from the NWT after division.

Finance minister Kelvin Ng said last week it's too early to speculate on the changes, which will begin taking place this year. But he pointed out that education and housing are priorities outlined in the Bathurst Mandate.

Ng agreed that Nunavut needs to protect itself against a sustained economic downturn. "We have a limited ability to generate our own revenue due to the high cost of service delivery, scattered populations and underdeveloped infrastructures," he said.

He said he hopes the funding-formula negotiations for the next financing agreement with Ottawa will include more protection for Nunavut. The current agreement expires on March 31, 2004.

"We need to simplify the formula, make it easier to work with and to predict revenues," he said. "We'd like to take out some of the spikes and make it more consistent."

Fraser's report called on the government to tighten up spending practices and auditing procedures. For example, the auditor noted Dev Corp's financial control system is seriously flawed.

Dev Corp is supposed to provide independently audited statements to the finance department. "It hasn't been doing so and it is our responsibility to make sure they do that," said Ng, "by hounding them to death and by holding back funding if we have to."

The report also recommends a re-examination of approved limits for revolving funds and said the government needs to hire more financial managers. According to the report, financial statements and annual reports from Crown corporations are often late.

The auditor general suggested the legislative assembly consider allowing the tabling of documents even when it isn't sitting. "This back-door tabling could allow MLAs and legislative committees to consider more up-to-date information between the assembly's sessions," she noted.

Ng said the finance department is about 80 per cent staffed and that legislation allowing back-door tabling will be approved in the next sitting. "We think it will come into effect within weeks," he said.

Ng said his priorities are beefing up the government's financial expertise and improving financial controls.

"It's a matter of following up (on the recommendations) and of how much time it takes to implement measures," he said. "You can't do it all."