Politicians advised to 'keep it real'
NWT Chamber warns MLAs to reign in 'mushrooming' public sector ahead of unveiling of territory's operating budget
Cody Punter
Northern News Services
Published Monday, February 2, 2015
NORTHWEST TERRITORIES
The NWT Chamber of Commerce is hoping the territory's ballooning public sector will be weighing heavily on the minds of cabinet and regular MLAs as Finance Minister Michael Miltenberger gets set to unveil the final operating budget of the 17th legislative assembly Feb. 5.
According to Mike Bradshaw, the chamber's executive director, the government's operating expenditures have jumped by 37 per cent, between 2005-6 and 2012-13. Meanwhile, the average GNWT employee salary went up by 45 per cent over that same period.
"Wages and benefits, they're mushrooming," he said.
"That's the part of housekeeping that needs to be really reigned in."
Bradshaw also cautioned MLAs to "keep it real" as they go through the operations budget over the next six weeks.
Just under a year ago, Miltenberger announced that the fiscal restraint exercised during the first two years of the 17th assembly had given the government the opportunity to pass a $1.6 billion budget that would "show the fruits of our fiscal responsibility."
However, it seems tough fiscal times have already come again. During his recent budget tour, Miltenberger alluded to the financial squeeze being faced by the territory and said the GNWT's operating budget is "not sustainable" without an increase in revenues.
Bradshaw said the "sense of urgency" exhibited by the finance minister is indicative of the fact that over the next five years, salaries collected from territorial and federal government employees in the NWT are expected to equal 45 per cent of the territory's GDP.
By comparison, government salaries in southern provinces like Ontario make up less than 20 per cent of their GDP, said Bradshaw.
"We've got a government that wants to be all things to all people so if somebody asks for something they give it to them, whether it makes sense for the economy or not. When I say the economy I'm talking about business, I'm also talking about employees and I'm talking about residents," he said.
"If you try to be all things to all people you're going to fail first of all, and secondly you're just going to spend a lot more money than you have, so let's keep it real."
Despite the fact the GNWT is anticipating operating surpluses for the next few years, its tax revenue is expected to flatline due in part to the lack of projected growth in the territory's economy.
Although he wouldn't spill any details regarding the upcoming budget, Miltenberger acknowledged that the GNWT is facing strained financial situation as a result of its growing costs.
"We're very aware that we have to manage our costs and that includes our personnel costs," Miltenberger told News/North.
He declined to say whether he would be announcing any job cuts.
"We can't have our program expenditures outpacing our revenue."
Adding to the territory's financial difficulties is the fact that it has so far made little progress in attracting 2,000 new residents over the next five years.
Last year, the territory's population decreased by a total of 35 people, according to the NWT Bureau of Statistics.
However, in the 12 months leading up to October 2014, 689 of the "new residents" accounted for in those numbers consisted of births.
During that same period, 2,567 people left the territory while just 2,046 people moved here - representing a net loss of 521 people.
According to Glen Burns, director of corporate affairs with the Department of Finance, 65 per cent of the GNWT's revenue comes from transfers from the federal government, with the funding formula being partially determined by growth of the territory's population relative to the rest of the country.
Despite the fact that the GNWT is set to receive $30 million more in federal funding this year than it did last year, Burns said the population decline is "creating a dampening effect" on the funding formula used to determine the value of those transfers.
That means the GNWT is faced with a situation where it will have to either eat into its surplus or reduce its operating and infrastructure budgets, according to Burns.
"Difficult choices will have to be made in order to ensure that the GNWT does not have to struggle fiscally," stated Burns in an e-mail to News/North.
Although the GNWT has made little progress on getting people to migrate to the territory, Miltenberger said recent layoffs in Alberta as a result of plummeting oil prices could provide an opportunity to attract new talent.
"You don't want to benefit from peoples' misfortune, but in places where there's downturns in employment, down south on the oil patches for example ... there's people looking for work," he said.
The legislative assembly already approved its capital budget during its last session, to the tune of $277 million.
Approximately 40 per cent of that money ($111 million) will go to the Department of Transportation with a large percentage of that going toward upgrading Highway 7 and $90 million for the Inuvik to Tuktoyaktuk highway project.
Over the last year Miltenberger has publicly stated the GNWT will need to invest more in infrastructure projects in order to attract economic investment to the territory, with the ability to spend money in the future hinging on whether or not the federal government will bump the territory's debt ceiling up by $1 billion.
Although Miltenberger was originally hoping the feds would make a decision before he gives his budget address on Thursday, he said it is now likely going to take at least until the federal government presents its budget in April.
If and when the debt ceiling is raised, Miltenberger said he would like to be able to spend "hundreds of millions" worth of capital towards renewable energy projects to help diversify the territory's energy production.
While Bradshaw is emphatic about cutting the operating budget, he said the government should continue to invest in infrastructure projects because they could potentially attract investment, grow the economy and provide jobs.
"It's not a case of if you will build it they will come," he said. "But you can rest assured that if you don't build it they'll never come."
