Merci, Monsieur le President. I love taxes. I can and want to pay more taxes to help those in need here in the Northwest Territories, in Canada, and elsewhere in the world. I just wish there were others in this House that believed the same, especially on the Cabinet side.
"Taxes are what we pay for civilized society", so said American Supreme Court Justice Oliver Wendell Holmes Junior in 1927. If we truly want better programs and services for the residents of the Northwest Territories, a more sustainable financial future, a just and compassionate society, and a planet we can pass on to our children, we must be willing to raise and pay more taxes. A good government does its best to ensure an equitable distribution of resources. I'm sorry to say we have collectively failed and this budget does very little to move us in the right direction.
I had to push very hard to get the Minister of Finance to prepare and then post a revenue options discussion paper last year. The paper was finally released just two or three days before the public engagements that were held on the 20222023 budget that is before us. The current budget offers this throwaway statement with regard to taxes: "We will continue to monitor the data on who is paying taxes in the territory and on what kinds of income. At the moment, we have only a small number of individuals who could potentially be in a higher tax bracket." The other reason for not adding a higher income tax bracket is the "substantial risk to our competitive position". Let’s look at the facts, Mr. Speaker.
The finance minister's revenue options paper shows that the Northwest Territories is one of only six Canadian jurisdictions that have less than five income tax brackets. We have got three.
We had the second lowest combined top marginal personal income tax rates in the country, more than 5 percent below the average. If the GNWT brought in a new high income tax bracket of 16 percent for those earning $200,000 or more taxable income, it would affect 420 taxpayers the top 1 percent. It would raise their taxes on average about $2200 a year and bring in another $1 million in revenue. That’s not a lot but it should be the beginning of a more serious look at tax fairness, something this Cabinet started with a reduction in small business taxes that cost our government $1.4 million with no effort to replace those revenues.
Another highincome tax rate bracket would also help to replace the corporate resource giveaway earlier in the life of this Assembly when the ITI minister gave a 15year significant discovery licence to Husky Oil, with no rental fees, costing us $21 million in lost revenues.
What other opportunities are there to raise more revenues?
The promise of devolution and more resource revenues has been a dismal failure. Low commodity prices and financial uncertainties are partly to blame but our chronically low resource royalties are the biggest problem. ITI contracted a report that applied an internationallyaccepted framework for managing natural resources in 2017. That study gave our fiscal regime for mining a failing grade in terms of revenue generation. "The NWT has one of the world's most charitable fiscal regimes for the mining sector, one that captures 20 to 30 percent of economic rents from mining projects, net of costs. This is compared to between 30 to 35 percent in South Africa, 45 to 60 percent in Peru, and 50 to 80 percent in Western Australia."
A more recent study commissioned by the Standing Committee on Economic Development and Environment found that "the NWT sells its nonrenewable resources more cheaply than most other jurisdictions in the world" and "we find that the aftercost share of revenues to the government (the government take) is around 36 percent, with 22 percent for the NWT and 14 percent for the federal government.
The International Monetary Fund suggests that a government should expect 40 to 60 percent from a mining project. We are simply giving away our resources when we should be maximizing the benefits. The recently released discussion and research papers on mining royalties are so vague and biased that it is hard to see how any meaningful public engagement is going to take place. Regular MLAs and the public have yet to see a real plan and schedule for the development of regulations under the Mineral Resources Act. The snailspace development of royalty regulations by this Cabinet has little chance of being completed during our term and resources will simply continue to be shipped out of here without maximizing revenues and benefits for NWT residents, let alone future generations.
Other new revenue resources our government needs to more seriously consider include a capital tax on financial institutions. We are only one of five jurisdictions without such a tax in Canada. Our wildly fluctuating corporate taxes are a lousy way to capture benefits from resource development and should be supplemented with a resource tax or capital investment tax.
There is no mention in the entire budget of any efforts to stabilize or increase any revenue sources. We need to start to have a real public debate about options to raise revenues, including an updated territorial formula funding arrangement that allows us to keep more, if not all, of our own source revenues.
Some, and perhaps many, will say that a pandemic is not a good time to introduce new taxes or increase taxes but our current path is completely unsustainable and we need to have that debate. I would argue now is the best time to examine our core values of sharing, justice, equity and whether these are truly reflected in our revenue efforts as we recover and rebuild.
Another way to spend more on our programs and services for those that need them the most is to reduce our capital spending. I won't go on too long about this as I covered a lot during the debate on the capital estimates. There is no use trying to spend money on projects during a pandemic when about half that money is carryovers from previous years, and we still don't have significant improvements in our procurement process to better retain benefits.
The spending priorities in the capital budget, especially on questionable projects such as Taltson Expansion and the Slave Geological Province, do not reflect my priorities or our collective needs such as housing. Treat housing like it's a megaproject, and provide the jobs we say we're pursuing with the big projects. We can't do it all and we need to focus on people and their housing needs, not megaprojects with no funding, no business cases, and no buyers. We simply cannot afford them all at once, even if the federal government gave us or other potential partners all the money. There would be lots of costs in simply managing these projects after completion. Just look at the $12 million a year that the GNWT must pay each and every year for another 25 years for the Tlicho AllSeason Road. Those project payments are eating into our ability to spend on programs and services. Stop the spending on these wasteful large projects now and use that funding on housing, education, and healthcare that will make a real difference in people’s lives. If Cabinet has to have one megaproject, use a phased approach for the Mackenzie Valley Highway to ensure that we can maximize local benefits.
The government renewal initiative has slowed down and I've yet to see any results. While I support the concept of program evaluation and review, this work cannot possibly find spending cuts to fund our unsustainable path when there is overspending on capital, growing debt, and no willpower to raise more revenues.
In terms of the budget process, I can say that the relationship and negotiations with Cabinet over financial matters have been cordial and respectful, a much different and welcome change from the previous Assembly. I have recommended several times, to no avail, that it would be more helpful to have a meeting with the Minister of Finance and Regular MLAs to discuss priority areas for increased funding prior to the development of a budget. That didn't happen but I would again encourage the Minister to do this next year to ensure Regular MLA input much earlier into the process.
While I appreciate the difficulty of trying to carry out prudent fiscal management during a pandemic, we are facing a fiscal crisis despite anything said to the contrary by the finance minister. We just had our debt limit increased to $1.8 billion and in this budget we will be at $1.7 billion.
Debt continues to increase at a pace greater than our revenues and spending. I agree with my colleague from Yellowknife North and others in this House that I had hoped for a substantial increase in the funding for the Northwest Territories Housing Corporation that has failed to materialize in this budget. Of course we are still waiting for a plan to get our residents out of core housing needs, something I've been waiting for for about five years now.
I believe there are ways to fund more work on housing through the tax increases and other revenue options I mentioned earlier. I also believe that there is room to reduce some travel expenditures further and contracted services as well. There are some staffing increases in the Department of Finance that I think we can do without so we can redirect those funds to some of the priorities of Regular MLAs as well.
Much of the funding for the COVID Secretariat functions are likely not necessary given the pace at which the public health emergency is going to be lifted as mentioned even earlier today by the Minister of Health and Social Services.
I can support some of the new funding in this budget for healthcare, reducing the municipal funding gap even if the additions don't keep pace with inflation, the support for vulnerable populations, education, and childcare. Some of the economic initiatives could be better focused on diversifying our economy.
I am increasingly worried at the lack of progress on completing the ongoing Indigenous land rights negotiations and implementation of the agreements already in place. There is apparently around $1 million for new work on barrenground caribou although I am eagerly awaiting details, especially to see if this government is finally going to do something about habitat protection.
There is little to no mention of the untapped potential of arts and culture to diversify the economy. This is nobrainer in my opinion, and there isn't even a whisper of it in this budget. The vague arts strategy should have been used to help identify opportunities for investment and spur on economic recovery but there is nothing in this budget for that work.
Thank you, Members, we will take a short recess.
