Mr. Speaker, I would like to take this opportunity to update Members and NWT residents on our territory’s economic and fiscal outlook.
April 1, 2011, marked the start of a new fiscal year. The measures included in our 2011-2012 budget are now being implemented, including over $1.3 billion in operating expenditures and more than $155 million in planned capital investments. These expenditures will be used to deliver needed public services and infrastructure to NWT residents and will continue to support our economy.
There is good news to report on the economy. In April the NWT employment rate rose to its highest level since 2008. Two thousand additional persons were employed in the NWT last month compared with one year ago. Preliminary estimates of 2010 Gross Domestic Product released earlier today indicate that the NWT economy grew by 5.8 percent last year, reflecting a recovery from the recession that began in late 2008. Our territory’s largest industry, diamond mining, increased by 6.3 percent as production levels increased in 2010 in response to rising diamond prices. Record levels of government stimulus spending, along with a rise in private sector investment, helped the construction industry grow by over 25 percent in 2010. Finally, earlier this week BHP Billiton announced plans to invest, together with its partners, $323 million in its Ekati Diamond Mine over the next few years.
As a territory we have managed our way through the most serious economic downturn since the Great Depression. Two years ago we faced unprecedented economic turmoil that caused everyone, businesses, governments, and individuals, to review their assumptions and re-evaluate their plans. The NWT economy shrank almost 20 percent over 2008 and 2009 as financial markets tumbled and commodity prices fell. NWT businesses and industry made difficult decisions to ensure they remained viable over the longer term. It is reassuring, therefore, to see that the NWT economy has started to grow again and begun to recover lost ground.
The GNWT was no different in needing to adjust our fiscal plans over the last few years to reflect changing economic conditions. Like all governments in Canada, during the downturn we made a conscious decision to support the economy by maintaining spending levels, deferring tax changes, and investing aggressively in infrastructure. Like all governments, as the economy strengthens and the private sector re-emerges, we now need to return to fiscal policies that are more sustainable over the long term.
Since I presented the budget last February, political unrest in some areas of the world and natural disasters in others have brought more uncertainty to the global economic recovery. Recent dramatic fluctuations in commodity prices remind us that we are not out of the economic woods yet. This makes continued vigilance and sticking to a well thought out fiscal strategy even more critical.
The fiscal strategy we have adopted has served the GNWT and NWT residents well:
We have maintained tight control on our operating costs. Our budget process has been more controlled, planned, and accountable. Annual operating spending, net of compensation and benefits, has grown at an average annual rate of only 2.8 percent over the life of this Assembly. We have set a cap of 3 percent on future spending growth and are committed to staying under that cap.
We have maintained a competitive tax regime for NWT individuals and businesses, and not introduced any major tax increases.
We have implemented changes to our government’s capital planning process to improve the planning, acquisition and delivery of infrastructure. Capital projects established through this new process are being delivered within budget.
We responded to the economic slowdown by aggressively increasing our expenditures on infrastructure. Including the 2011-2012 capital budget now being implemented, we have put in place a record three-year $1.1 billion capital program for roads, bridges, schools, health centres, houses, and other critical projects across the NWT.
This major investment in capital has not only helped to stabilize the territorial economy, it will also leave a legacy of badly needed public infrastructure. In doing this, we have been able to leverage an unprecedented amount of federal economic stimulus investment. However, once we complete the projects included in our current infrastructure investment plan, capital investment will return to its historical level of $75 million per year, starting in 2012-2013.
Our fiscal strategy has allowed us to manage through the uncertainties and unexpected events of the last few years. By sticking to our strategy, we have preserved a fiscal cushion of about $42 million at the end of this fiscal year against unexpected events like a bad fire season. The reality is that we will need to manage our way through more challenges ahead that will continue to squeeze that fiscal cushion.
The demands for government to introduce or expand programs are unrelenting, but our revenues cannot hope to keep pace with those demands. We need to maintain discipline on our spending growth.
Despite the record level of investment in the last two years, the need for public infrastructure -- in hospitals and health centres, in roads, and in housing -- is huge. Our capital resources are clearly insufficient. We need to find ways to finance these critical investments by finding partners in the private sector and by engaging Canada on the vast opportunities our territory holds.
The federal government is facing fiscal pressures of its own and we need to ensure that NWT interests are advanced and protected, whether the issue is the borrowing limit, territorial formula financing, funding for health care, federal program spending, or infrastructure investment. Now that the federal election is over, we need to work to get our priorities front and centre with Canada. An immediate fiscal priority will be getting certainty about our borrowing limit.
As a government, we have continued to provide quality programs and services to the residents of the NWT while making room for investments and policy changes in key areas that will benefit the NWT for years to come. We have made some tough fiscal choices over the past four years to allow us to make these investments. We know there will be more difficult decisions ahead.
The Members of the 17th Legislative Assembly elected this October will face those difficult decisions. As part of our transition planning, we are working to frame up many of the choices and options that will be open to them.
In the budget address I noted that as fiscal resources become more constrained, we all need to be clear more than ever on what our priorities are. NWT residents and businesses must be prepared to engage in a meaningful and frank debate on priorities, and balance that with their expectations of what the government can and should be doing. Thank you, Mr. Speaker.
Thank you, Mr. Miltenberger. The honourable Minister responsible for Justice, Mr. Lafferty.
