Mr. Speaker, as this is the last session of the 16th Legislative Assembly, I would like to take this opportunity to update Members and NWT residents on our fiscal and economic outlook, and to describe the difficult decisions that will be facing the 17th Legislative Assembly.
Let me first say, our Assembly has a lot to be proud of. We made some tough choices to reduce in some areas to provide funds for the key priorities of this Assembly. By the end of its term, the 16th Legislative Assembly will have invested almost $297 million of new initiatives funding in priority programs to support the economy, protect the environment, reduce the cost of living, invest in NWT residents, build sustainable communities, and create affordable government. This includes the four-year $60 million Energy Investment Plan to provide energy programs and infrastructure
designed to help lower the cost of energy in the NWT and reduce the territory’s reliance on fossil fuels.
Work on the 2011-12 public infrastructure investments of $155 million is well underway. Together with our infrastructure investments in 2009-2010 and 2010-2011, the GNWT will have invested over $1.1 billion in roads, bridges, schools, health centres, housing, and other critical infrastructure in the NWT.
Our careful planning to keep expenditures under control and the difficult decisions we made to raise some taxes meant that we had the fiscal resources necessary to manage our way through the most serious economic downturn since the Great Depression. Our record-breaking levels of infrastructure spending helped stabilize the economy while NWT businesses and industry made decisions to ensure their viability over the longer term.
However, this level of investment is not sustainable and our fiscal reality will not permit us to relax our willpower if we want to preserve our accomplishments. We are very close to the federally imposed borrowing limit, especially by the end of 2011-12 and 2012-13. Without careful adherence to a fiscal strategy that maintains discipline in controlling expenditure growth, we will have no leeway to deal with unexpected revenue declines or expenditure shocks, such as a severe forest fire season or higher energy prices.
I would remind Members that our fiscal strategy is based on the following planning assumptions:
Capping expenditure growth at 3 percent a year. This provides for only $32 million a year to address increased program costs and demands, as well as funding for strategic investments.
Reducing capital investment levels starting in 2012-13 to $75 million per year.
Incurring short-term debt when needed. Long-term debt may need to be considered, but only if it is sustainable within the parameters of the fiscal responsibility policy.
Does not currently include revenue increases or reductions in current programs or services.
While the fiscal strategy is designed to recoup cash resources and ensure we achieve a moderate operating surplus to finance our capital plan, it does not address the continued demands to increase programs and services. Moreover, the reduced level of capital investment will not keep up to our growing infrastructure needs for medical facilities and equipment, highways, and housing. Over the next five years, our list of large capital needs is estimated to be $2.7 billion, or $530 million per year. Significantly higher than what we are currently planning for.
We are also fully aware of the slowness of the economic recovery and how NWT employment, corporate profits and government revenues are recovering even more slowly. The GDP, labour force, and employment rate continue to remain below pre-recession 2007 levels.
The 17th Legislative Assembly may find its choices are limited by the federally imposed borrowing limit. Borrowing our key infrastructure priorities, especially if long-term operation savings could be demonstrated, would be an option if we were not constrained by the borrowing limit. Fiscal sustainability could be assured without the borrowing limit through adherence to the Fiscal Responsibility Policy.
The inadequacy of our capital budget and our borrowing limit are just a couple of the challenges that the 17th Legislative Assembly will be facing.
Continuing the current fiscal strategy allows the GNWT to move away from the debt limit, while still allowing for some minimal investment to support priorities indentified by the 17th Legislative Assembly.
This approach, however, does not provide for the additional investments that are needed to address infrastructure needs or for other demands for investment without either more extensive reductions to existing programs and services or revenue increases.
Every Assembly faces its set of unique challenges and opportunities. Every Assembly builds off the work of the previous Assembly. The 17th Assembly will be no different. We have successfully managed our way through some extremely difficult times and we will continue to do so. That is what Northerners do. Thank you.
Thank you, Mr. Miltenberger. The honourable Minister responsible for Transportation, Mr. Michael McLeod.
