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The Northwest Territories Budget: An opportunity for Today and the Future Overview 1. Context: citizens’ priorities, recession, long term trends, government capacity 2. Recommendations – Revenues – Savings – Spending

The Northwest Territories Budget: An opportunity for Today and the Future Context: Priorities What do Canadians care about? Education, health, environment, fairness, economy (when it’s down, not to exclusion of others) Northern concerns similar, plus cost of living, others per 16 th Assembly Priorities There is a public demand for strong, effective public programs 3

The Northwest Territories Budget: An opportunity for Today and the Future Context: Recession Worst since Great Depression? Green shoots of recovery, or second dip? Will only know these things in hindsight What we do know: – Workers and families feel the impact – Job losses continue after recession ends – Public spending is propping up economies 4

The Northwest Territories Budget: An opportunity for Today and the Future Context: Recession & Policy The non-ideological view – economists, bankers, international organizations, finance ministers Recession is part of the business cycle When down, stimulate. When up, cool it. Countercyclical monetary and fiscal policy. – Monetary: Bank of Canada. – Only Territorial option is fiscal (spend/save). 5

The Northwest Territories Budget: An opportunity for Today and the Future Context: Long Term Details are not clear Some big picture elements are clear: – Recession will end – Fossil fuels scarcer and costlier Macquarie Bank (Globe Sept 16): peak oil 6

The Northwest Territories Budget: An opportunity for Today and the Future Context: Fiscal Capacity Three elements: Among strongest balance sheets in Canada Well under borrowing cap – smart debt vs. dumb debt New revenues capacity 7

The Northwest Territories Budget: An opportunity for Today and the Future Budget Recommendations 9

The Northwest Territories Budget: An opportunity for Today and the Future Revenues Federal rules allow new taxes and tax rate increases with no clawback Integrated package of reforms – Some up, some down (smart tax reform) Social, economic, environmental improvements Raised tobacco, liquor revenues – good start – Implement , phase in over 4 years – By year four, raise additional $54 million 10

The Northwest Territories Budget: An opportunity for Today and the Future Savings Two goals: year-to-year, and long term Year-to-year: countercyclical spending – When economy hot, take money out (save it) – When economy cold, spend it – Economic Stabilization Fund (savings acc’t) Long term: – When resource revenues decline – Territorial Trust Fund (RRSP) 11

The Northwest Territories Budget: An opportunity for Today and the Future Spending – Short Term Economists: no cuts: don’t even discuss No P3s: – Expensive: profits, advertising, cost to borrow – Accountability: “offshoring” debt, commercial confidentiality No Privatization – E.g. ATCO shopping for new assets in North – NWTPC: high annual net revenues: plum 12

The Northwest Territories Budget: An opportunity for Today and the Future Spending – Short Term Recession stimulus test – 3 criteria: 1. Implement immediately 2. Value: number of jobs per dollar spent 3. Prepare us for the long-term future of expensive energy Illustrate use of these criteria – Traditional: roads and bridges – New: energy efficiency upgrades for buildings 13

The Northwest Territories Budget: An opportunity for Today and the Future Spending – Short Term 14 Criteria New roads and bridges Energy efficiency Implement immediately?Some delaysYes Value: jobs per dollar? Far better than oil and gas Better than both Prepare for expensive energy future? No (wrong way) Yes

The Northwest Territories Budget: An opportunity for Today and the Future Criterion #2: Value Number of jobs per dollar 15

The Northwest Territories Budget: An opportunity for Today and the Future Spending – Short Term Energy efficiency upgrades in buildings Insulation, weatherstripping, doors, windows, furnaces, etc. – can start immediately Public buildings and public housing Private residences: subsidy – NWT: $7-35 million – person-years employment owner cost savings, energy conservation, reduced emissions, green jobs, boost small business 16

The Northwest Territories Budget: An opportunity for Today and the Future Spending – Long Term Revenue capacity  citizens’ priorities Helping the most vulnerable – Progressive tax and income support system – A.k.a. “automatic stabilizers” Cultural and language preservation programs Early childhood education: – extend public system: $18m Quality public health care Sustainable transportation - transit where practical 17

The Northwest Territories Budget: An opportunity for Today and the Future 18