Thank you, Mr. Speaker. Mr. Speaker, two years ago the world economy experienced a downturn unprecedented since the Great Depression. The turmoil touched everyone including Canada. The NWT economy shrank in 2009. Employment fell by 5.2 percent and mineral exploration by 80 percent.
We are encouraged by the fact that the positive signs of growth observed earlier this year appear to be confirmed. Forecasts of NWT economy are predicting growth in 2010-2011 fuelled by a rebound in the diamond industry. The Conference Board of Canada forecasts that our economy will grow by 4.8 percent this year and 9.3 percent in 2011. Mineral exploration is forecast to increase by 125 percent this year to almost $100 million from $44 million in 2009, although it will not reach the levels seen in 2008. However, because labour markets have yet to gain the same traction, employment growth will lag the recovery somewhat. This is consistent with the outlook we presented in the 2010 budget last January.
Despite these positive reports, we cannot assume that we are out of the woods yet, economically speaking. The world’s economic outlook continues to be uncertain. Economic growth in Canada appears to be slowing and the state of the U.S. economy is troubling. We have adopted a fiscal strategy to see ourselves through these uncertain times. We know that our plan is a sound one. We must manage our way ahead with continued caution and vigilance.
We entered the downturn in relatively good financial shape, which allowed us some room to respond to the decline in economic activity in the NWT.
The 2009 and 2010 GNWT budgets were prepared based on a conscious decision to mitigate the effects of the recession. This included maintaining spending levels and pursuing an aggressive plan of infrastructure investment.
Over the previous and current fiscal years we will have invested more than $700 million in infrastructure in the NWT, not including the Deh Cho Bridge. However, we do not have the fiscal resources to maintain current levels of investment indefinitely.
The budget we approved last March assumed a slow economic recovery following the upheaval of late 2008 and early 2009. We recognized, however, that our fiscal plan needed to include measures to return to a sustainable path over the next few fiscal years; measures such as maintaining a tight rein on spending growth and reducing capital investment over time to historical levels.
We are not alone in the fiscal approach we are taking. All governments in Canada are expecting a period of tight fiscal control as they seek to return to balanced budgets.
The fiscal strategy laid out in our 2010 Budget calls for new spending to be capped at 3 percent per year starting in 2011-12, net of compensation increases. It also calls for a return to lower levels of capital investment once current projects are completed.
Yesterday I tabled the 2011-2012 Capital Estimates. Our capital plan proposes investments of $126 million, not including infrastructure contributions to communities and the NWT Housing Corporation. These will bring the total planned investment in 2011-2012 to $171 million. This means that over the life of the 16th Legislative Assembly we will have invested over $1 billion in badly needed infrastructure in the Northwest Territories.
Despite the forecast growth in the NWT economy, we should not expect dramatic growth in our own tax revenues.
We will be monitoring corporate tax information in the coming months, to learn what effect the downturn had on 2009 corporate income in the NWT.
In late September the Department of Finance issued a discussion paper seeking input from NWT residents on options for introducing a revenue-neutral carbon tax to encourage a reduction in greenhouse gas emissions and hotel tax to fund tourism strategies. Both of these options have been brought forward in earlier consultations and while neither of these options reflects current GNWT tax policy, they are intended to stimulate public discussion that can inform further work.
Last week the department hosted the third roundtable on fiscal and revenue options, where representatives from a broad range of business, social and environmental organizations, as well as community and aboriginal governments, talked about these options and provided their thoughts. While there was not unanimity, there was a general consensus that both of these options deserve more thought and research. I encourage all NWT residents to read the discussion paper and submit comments by the end of October.
Mr. Speaker, the approach laid out in our fiscal strategy will return us to a sustainable fiscal path. But achieving this will require strong discipline on the expenditure side. We are entering the final year of the 16th Assembly. With the limited time left to us we need to focus on consolidating the gains we have made, and finish and deliver what we have begun. Thank you, Mr. Speaker.
Thank you, Mr. Miltenberger. The honourable Minister responsible for the NWT Housing Corporation, Mr. Robert McLeod.
