The 17th Assembly of the Northwest Territories has made significant progress in positioning the NWT for future economic prosperity. Clearly Devolution of land and water from the Federal to the Territorial Government will be the legacy of the Assembly for generations to come. As a resource-based economy nothing could be more important for self-determination than the transfer of these authorities.
There are also many other noteworthy accomplishments:
- Construction of the Mckenzie Valley Fibre Optic link which will further expand the capacity of the Inuvik Satellite Station to serve global clients reliant on polar-orbiting satellites;
- Development and implementation of the Economic Opportunities Strategy, our economic roadmap, is already showing progress such as the new online database created to streamline information about government and private-sector funding programs and services for NWT business and entrepreneurs;
- Development and implementation of the Mineral Development Strategy the new Mineral Incentive Program and the Geological Minerals Storage Facility to lower industry costs and instill investor confidence;
- The bold commitment to freeze business and personal income taxes in the 2015/16 fiscal year to help control the high cost of operating and living in the North;
- Funding to help NWT Tourism become a world class destination marketing organization and to establish a Convention Bureau, which has been successful right out of the gate.
All of these initiatives and others underpin our economic future.
Building our economy is a work in progress and will require a continuation of the hard work and dedication by the 18th Assembly.
THE BUSINESS CONTEXT
While all of the above collectively represent positive progress, the impacts have not had perceptible benefits for businesses across the NWT. On the contrary, the business community is ensconced in angst regarding the absence of positive economic signals.
Business people don’t just see what’s going on, they live with it every day. They feel the effects of limited economic growth and limited opportunities. They feel the effects of high operating costs and they are aware of and worry about negative migration rates and its effects on the labour force and federal transfers.
Through a Business Issues and Priorities survey in September 2015, Chamber of Commerce members throughout the NWT identified the top three priorities for the upcoming Legislative Assembly:
- Economic Growth: 87.6%
- The Cost of Electricity: 71.4%
- Population Growth Strategy and Incentives: 62.8
Business people were also asked about their confidence in the economy. Over the next 12 months 65.3% indicate the economy will decline while only 3% feel it will improve. Over the next 36 months 52.8% feel it will continue to decline and only 21% feel it will improve.
eflective of these tenuous perceptions, respondents indicated that hiring intentions for the next 12 months are flat; mirroring results from the 2014 survey.
These are telling results. Without business confidence and investment who will provide jobs? How will governments raise tax revenue to pay for new water treatment plants, health care, or municipal and territorial infrastructure?
The NWT is at the crossroads. Regardless of global factors, we have serious issues in the NWT and we need serious minded people to resolve them.
On the cusp of a territorial general election, the NWT Chamber of Commerce offers the following priorities going forward. These priorities are supported by chamber members across the NWT.
1. ADDRESS THE COST OF ELECTRICITY
NTPC and its rate payers are saddled with legacy infrastructure. Because of the small size of the market, neither ratepayers nor government can afford to invest in electricity infrastructure on a scale that would reduce the cost of power.
The high cost of electricity is an issue for everyone in the NWT, businesses and residents alike. We’re not saying anything new here.
What is new is solid state technology, available today, which improves the efficiency of generators by 20-30%: diesel, gas and hydro.
Solid state technology:
- Reduces fuel consumption by 20%-30%;
- Reduces maintenance by 30-40%;
- Virtually eliminates blackouts; and
- Eliminates need for traditional generator redundancies.
Solid state technology integrates with existing gen-sets from 150 kilowatts to 4 megawatts. Fuel and maintenance savings would provide a reasonable payback period on the investment and help reduce government transfers required for the cost of unforeseen power production costs.
This initiative would likely qualify for the new Federal government’s investments in energy sustainability fund. The new Federal government has committed to invest $100 million annually in clean technology producers.
- Conduct the due diligence required to ensure a reasonable payback period.
- Negotiate funds from the new Federal government.
- Retrofit NTPC power generating stations with solid state technology.
In order to offset some of the capital requirements of this initiative, we recommend you transfer existing funds from proposed wind and solar projects which have a marginal impact on local production and generally have no payback.
2. IMPROVE GOVERNMENT PROCUREMENT PRACTICES
In meetings with senior members of Cabinet over the past two years, the NWT Chamber has presented myriad concerns with Government Procurement Practices. We are encouraged that the government has moved forward with a review and is planning to increase Sole Source Limits for Goods and Services and Professional Services.
The planned changes will align the GNWT procurement limits with those in many other Canadian jurisdictions.
Increasing the sole source limits from $5,000 to $25,000 will streamline the work load associated with low value contracting for the private sector and for government employees engaged in producing RFP’s and evaluating submissions. This makes the process more efficient and effective for both parties.
Increasing the limit from $25,000 to $50,000 for most professional services will have the same effect for both parties.
There are other steps that should be taken to streamline procurement practices in the interest of efficiency and fairness to small northern businesses and independent northern consultants.
- Increase procurement limits as described above.
- Tighten up BIP qualifications. BIP should only be available to businesses which reside in the NWT. Businesses which have re-located core operations to other jurisdictions or have never been resident here should be ineligible for BIP. Doing so inherently recognizes the value-added that resident businesses and professionals bring to the NWT through taxes and federal transfers. Non-residents add little, if any, value.
- Reduce the requirements for Standing Offer Agreements. PWS issues requirements for SOA’s and ITI does the same. Repetitive qualification processes create a significant burden on small northern businesses and independent northern consultants with no returns.
- RFP evaluation systems should award points for NWT residency and the value of taxes paid to the GNWT. Again, this recognizes the value-added that resident businesses and professionals bring to the NWT.
3. POPULATION GROWTH STRATEGY
Statistics Canada and the NWT Bureau of Statistics have made adjustments to actual population data in the past few months. While the adjustments appear positive on the surface, the reality is that our population is headed in the wrong direction.
Between 2006 and July 2015 data from the NWT Bureau of Statistics indicate that the population grew by 2.1% (910 people). While the data is correct, the reality is that the NWT’s net migration rate over that period was more than (-4,200). In other words, roughly 10% of the population left over that same 10-year period and in-migration rates fell well short of that figure. The offsetting factor is births. The NWT has one of the highest birth rates in Canada, second only to Nunavut. We need a sustainable strategy to induce inmigration and fill the gap for nurses, teachers and other professionals.
- Provide recent graduates with a $25,000 forgivable loan to be applied against student loans; forgiven at a rate $5,000 per year. After five years the forgivable loan is written off. The value of federal transfers over that period is more than $150,000. In that context the forgivable loan is self-funding and the GNWT’s net benefit is $125,000, along with additional personal taxes.
Recently there was discussion of making conditional job offers while attending college and university job fairs. We support this notion. It puts the GNWT in a proactive position and eliminates advertising and recruitment costs.
4. INCREASE THE NORTHERN RESIDENTS INCOME TAX DEDUCTION
Governments in the NWT can alter the cost of living in the North to some degree, but the most obvious path to lower costs is by increasing northern allowances through the Federal government. It’s important that northern families and businesses have money to save after they’ve paid for essentials and the time to act is now, not years from now. As Northerners, we are entitled to a standard of living similar to Southern Canadians and we should not be unduly penalized for choosing to live here in a high cost environment. We need a high level discussion about the impact on taxes on the cost of living. Recommendations Immediately undertake a concerted, focused initiative to convince the Government of Canada to increase the Federal Northern Resident Income Tax Deduction; not just once, but annually.
5. AGGRESSIVELY PURSUE CRITICAL INFRASTRUCTURE DEVELOPMENT
Over the past several years the GNWT has invested heavily in schools, community facilities and airports; these types of projects are investments in the future. Over the next few years we have to invest in the future of our economy.
Projects like the Inuvik – Tuktoyaktuk Highway and the Mackenzie Valley Fibre Optic Line need to be pushed to the finish line. The Mackenzie Valley Highway, Whati all-weather road and the Ingraham Trail extension all need to get off the drawing board.
We can’t afford to do everything at once, but if we work together we can build critical infrastructure that binds our Territory and our economy together in a way that’s never before happened in the NWT.
Investing infrastructure is vital to creating jobs today. Every dollar spent on public infrastructure makes our economy more competitive. In Canada’s North, transportation infrastructure investments are vital to getting people to resource sites and our resources to market.
Increasing the GNWT borrowing limit to $1.3 billion is a critical step in addressing our infrastructure deficit. It’s impossible to build anything with one hand tied behind our backs. Increasing the borrowing limit enables us to plan ahead and make the investments necessary for our communities and for economic expansion.
We have a 25-year Transportation Strategy. We also have Corridors for Canada III. Both are strong, strategic plans for developing highway corridors and air infrastructure.
- Immediately pursue funding assistance from the new Federal government, which has committed to doubling federal infrastructure investment over the next decade to $125 billion and doubling current federal infrastructure investments in each of the next two fiscal years.