Mr. Speaker, I would like to provide an update on the fiscal planning being undertaken by the Government of the Northwest Territories for the coming fiscal year.
The government’s planning for the 2009–10 fiscal year began almost as soon as the review of the 2008 budget was completed. The 2008 budget outlined a fiscal strategy that included making significant reductions to our operating expenditure base — $135 million over two years, with a portion reallocated to investment priorities over the next four years. Operating expenditure forced growth would be capped at 3 per cent per year, excluding compensation and benefits, and we would increase revenues by $10 million starting in 2009–10.
The fiscal plan included in the budget identified spending reductions of $33 million in 2008–09 and a further $28 million in 2009–10. Further reductions would be identified through a variety of review processes. These measures were necessary to ensure the government avoids incurring operating deficits and instead achieves the operating surpluses we need to finance our infrastructure investments.
Nonetheless, to be effective no strategy can be cast in stone. A strategy is simply a plan to achieve a goal. We have reduced our target for expenditure reductions and increased our target for new revenues. This will bring our fiscal target to $111 million in reductions and incremental revenues.
In this case our fiscal goal is clear: to put the Government of the Northwest Territories on a sound, long term fiscal footing that allows us to achieve our vision and goals largely within our own fiscal resources. We cannot continue to spend every dollar we bring in to do the same things we have always done but pay more every year to do it.
We want to be able to make the investments needed in programs and infrastructure that will make a difference in the lives of NWT residents. We want to be able to approach the federal government from a position of fiscal strength rather than need, and we want to be able to assure the residents and businesses of the Northwest Territories of our commitment to fiscal stability.
These objectives become increasingly important in light of the very uncertain economic conditions we are currently experiencing, both in financial markets and in the energy sector. The NWT economy is strong. However, we must ensure that we are able to respond to changes that may result from international and national events.
Mr. Speaker, budget making is about making choices, and we want to ensure that the choices included in the government’s fiscal plans reflect the best advice, input and suggestions available. GNWT departments are currently preparing business plans for the coming fiscal year that will outline how our proposed actions and investments will further the achievement of the vision set out by this Assembly. We will be reviewing those plans with standing committees in November with a view to preparing the 2009–10 budget. We look forward to receiving input from Members on these plans.
Over the summer my Cabinet colleagues and I reviewed the fiscal strategy adopted last year, and we believe that some adjustments are needed to ensure that we stay on course. We have heard the concerns raised by MLAs and the public about the impacts of reductions on government services, on staff and on communities. We have heard the concerns from standing committees that we need to explore revenue options. We remain committed to the expenditure reductions already identified for 2009–10 and to finding ways to make government spending more efficient and effective, but we are also looking for alternatives to further large scale spending cuts.
This means looking at our revenues. We have set a target for raising a further $30 million starting in 2010–11, bringing our total revenue targets to $40 million.
Last month I began a consultation process to seek the views of NWT residents on how we can increase our revenues. We have laid out a wide range of revenue options for people to consider, and although it is not our intention to implement all of these options, we need to ensure we consider those that might best meet our needs.
Last week I attended a two day round table discussion at which representatives from all segments of the Northwest Territories provided their thoughts on how the government could achieve its fiscal objectives. The consultation is not meant to focus solely on tax increases. We want people to consider other ways to increase our revenue capacity; for example, through economic and population growth.
I would like to stress, however, that there are no easy ways to raise revenues from taxes. Each option will have some negative implications. We need to weigh those possible effects against those of further expenditure reductions. If it is not possible to identify some revenue measures that we can get general agreement on from residents and business, it will be necessary to revisit the expenditure side of our budget.
I encourage anyone with an interest in this issue to submit your comments to the Department of Finance by October 15. The results of the consultation will be shared with the public and discussed with the standing committee in November. Decisions on revenue measures will be announced in the budget in February.
Mr. Speaker, the 2008 budget spoke to the need to change the way we invest in infrastructure in order to get the maximum value for our capital dollars. This year will mark a significant change in the way we do our capital budgeting. The 2009–10 Capital Estimates will be presented for review by the Legislative Assembly during this session rather than in February with the Main Estimates. This earlier approach to capital planning will ideally allow contractors to fit our projects into their schedules, encouraging more bids and greater competition for GNWT projects. In addition, we continue to examine other ways to improve the GNWT’s capital planning process.
Before I conclude, Mr. Speaker, I would like to share some excellent advice I received during last week’s revenue round table regarding what a government should strive for in its fiscal planning.
First, the government must offer a vision for the future. This vision provides governments with guideposts that keep us on the road to long term success while we struggle with problems that may sidetrack us temporarily. Yesterday the Premier reminded us of the vision set by this Assembly: strong individuals, families and communities sharing the benefits and responsibilities of a unified, environmentally sustainable and prosperous Northwest Territories.
Second, government must strive to provide value for money. Our goal should be to provide the best quality government services at the lowest cost to our citizens.
Third, the government should save revenues collected from taxation of non-renewable resources so that future generations may enjoy the same benefits that we do.
Fourth, government should avoid passing on to future generations the cost of providing goods and services enjoyed by the current generation. This means not running deficits.
This is timely advice. We must keep the long term horizon in view while we deal with the short term challenges. We have had a tendency in the GNWT to do fiscal planning within a fairly short horizon of three to four years. We should not limit ourselves to looking ahead only a few years. We need to take a longer term view to picture what our territory could look like and what steps we might need to get there. We need to think about where we want to be 15 to 20 years from now and what this means for the investments we make today. We must also ensure we don’t mortgage our children’s future in doing so.
Thank you, Mr. Miltenberger. The honourable Minister of Education, Culture and Employment, Mr. Lafferty.
