Budget 2017-2018

Budget Address

Delivered in the Legislative Assembly

By the Honourable Keith Peterson, MLA
Minister of Finance

February 2017
Budget Address

Mr. Speaker, today marks the ninth time that I have stood in this house to present a budget.
I want you and my fellow caucus members to know that I greatly appreciate your
confidence and your support. Together we have come a long way, and we are working
together very well to deliver a better future for Nunavummiut.

Fiscal overview

Let me begin with a broad view of our financial situation. In one word, its balanced. For
the current year that ends March 31st, our budget projects an operating surplus of
$4 million. When we consider the adjustments we expect to make between now and year-
end, we can forecast a relatively small deficit of $11 million. I say, relatively small,
because this deficit amounts to one half of one per cent of all our spending. Essentially we
will end the year with the books in balance.

As for the year that begins April 1st, I am forecasting a surplus of about $2 million dollars.
Again, in the big picture, this small surplus really means that our budget is balanced.

Our revenues next year should reach $1.981 billion, up five per cent from this years revised
estimate. We will spend $1.918 billion, which is up less than three per cent. And I have
prudently set aside $40 million for contingencies.

Its worth looking at the source of our revenues, so that we can fully understand how weve
arrived at a balanced budget, and whether we are able to meet the needs of Nunavummiut.

Our revenue, now approaching $2 billion dollars, includes about $200 million of revenue to
be collected from Nunavut. We collect most of that $200 million through income taxes, rent
for staff housing, service fees, revolving funds and other sources. We collect what is fair,
reasonable, and relatively affordable for Nunavummiut.

As we develop our territory, and give full meaning to self-government, we will reduce our
dependence on the federal government. We will find our own way. But we are not there
today. Our economy is not yet large enough to support the range of public services
Nunavummiut deserve.

Think about this: For every $1 our government receives, just over 10 cents comes from
Nunavummiut. Most of the rest comes from the federal government.

2017-18 BUDGET ADDRESS i

I mention this for two reasons. The first is the federal governments contribution to our
finances. The Territorial Financing Formula will provide us with over $1.5 billion in the
coming fiscal year. We are about to begin discussions with the federal government about
renewing this funding arrangement.

The second reason I mention our own-source revenue is this: In the future, we should
expect federal funding increases to be very modest.

We can see the trend. Over the past five years, the Territorial Financing Formula has grown
by about five per cent each year. Looking ahead to the next five years, we expect annual
growth of just over three per cent. At the same time, the federal government is cutting the
growth rate in the Canada Health Transfer from the current six per cent down to three per
cent. For Nunavut, this slower growth reduces our flexibility, and our ability to deliver the
programs and services that Nunavummiut need.

We can easily understand that the federal government must balance competing priorities.
My point is that the federal governments decisions wont always work in our favour. And,
lets recognize that federal transfers are not large enough to meet our many and growing
needs. If we are to meet our vision of a better, stronger Nunavut, then we must do all that
we can to help grow our own economy.

Economic development is one of the governments four priorities, as described in Sivumut

Abluqta. The other priorities are to support Nunavummiut to develop self-reliance and
optimism, develop healthy families and strong communities, and improve our governments
ability to deliver results.

In implementing the Sivumut Abluqta action plan, we are making good progress. The
government will issue a report later this year to show what has been accomplished, and
where we need to focus our efforts.

General outlook

The economy is, of course, the foundation for growth and development. We can be
cautiously optimistic. The outlook is encouraging, but not rosy. The Conference Board of
Canada forecasts our economy will grow 4.9 per cent this year, excluding inflation.

The global mining sector has had a difficult year. But some analysts think things will improve
soon. Commodity prices may remain low this year. But gold and iron prices have begun to
bounce back. That may encourage more mining production and exploration.

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Certainly we are already seeing encouraging signs here at home. Production continues at
the Mary River iron mine, and the Meadowbank gold mine. TMAC Resources recently
produced its first gold at Doris North, and is seeking permits to expand its operations. Last
week Agnico Eagle gave the go ahead on its Meliadine and Amaruq projects. And other
projects continue to advance, including Chidliak, Izok Corridor, Whale Tail, and Back River.

The success of our mining sector is very important to our future. It is a key driver in growing,
and diversifying, our economy, and in providing jobs outside of government.

At the end of last year, 13,500 Nunavummiut had jobs. Thats up 800 from the year before.
Almost all those new jobs were occupied by Inuit. The unemployment rate at 14.9 per cent
was down a full percentage point from the previous year.

Economic development

These signs look good. But lets be clear that we need a great deal more economic growth,
steadily and over time. We are going to need more jobs. Today more than 10,000
Nunavummiut are in school. When they graduate, they will need to find their way in life.
That compels us to plan wisely, and to invest carefully so that our children find, and create,
opportunity.

That brings me to a discussion about the investments we need to make.

Our most pressing investment needs are very clear. We need to help Nunavummiut get
skilled up for a fair shot at better futures. We need better housing, so kids can study, and
parents can help them learn. We need better transportation between our communities and
with the markets for what we sell. We also need better communications systems.

To be sure, we have already started. We are all looking forward to opening the new Iqaluit
airport this summer. And were building marine infrastructure in Iqaluit and Pond Inlet.
These marine projects will greatly improve the sealift and fisheries. This budget commits
another $26 million over three years to get those projects done.

But there are other projects with big potential to help us develop. Im thinking about the
road and port proposed for Grays Bay. At nearly $500 million, this would be a record
investment in the Kitikmeot. It would create major opportunities. The federal governments
own transportation review said so last year. A road from Yellowknife to the coast of
Nunavut would cost nearly $2 billion. But it would also lead to nearly $40 billion in

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development projects. An Arctic gateway to the world would significantly increase
economic activity in Nunavut. But we cannot build it without federal government support.

We know that the federal government is open to projects that make a difference in peoples
lives. We see this in their $68 million investment to improve Nunavuts water systems and
waste treatment. And we welcome the federal governments commitment to share 75 per
cent of the upgrade costs. They should extend their infrastructure support to the Grays Bay
road and port. The project will make a real difference for Nunavut. Together with the
Kitikmeot Inuit Association, we will continue our discussions with the federal government
about moving this project forward.

We are also talking with them about our proposal to build a road from Churchill to Arviat,
Whale Cove and Rankin Inlet. As the Premier has said, were seeing some movement on our
proposal, but not enough yet. We continue our efforts as part of the Hudson Bay Regional
Roundtable.

We will also continue to press the federal government about our critical need for more
housing. This year we will build 17 housing units for staff, and 90 units for public housing.
Next year, another 95 public housing units. But clearly we need many more, as
overcrowding remains a serious issue. Using national standards, three in ten of Nunavuts
housing units are overcrowded.

Its not just about providing better shelter. Better housing would reduce stress, reduce
mental health challenges, and reduce family violence. Investments in housing mean better
health care and fewer people relying on income support.

In the coming year, the Nunavut Housing Corporation will launch the governments
Blueprint for Action on Housing. This plan addresses our housing crisis over the long term.
By long term, I mean a decade or two. In building the plan, government departments,
stakeholders and builders all agreed on what we must do. The plan includes 60 specific
actions, and we will get them done. But the one thing that the Blueprint does not have, and
that it critically needs, is enough federal funding. We will continue to seek federal support.

As we invest in housing, roads, marine infrastructure and other projects, we will also invest
in people. We will help them find better jobs, better quality of life, and better futures. We
must find a path away from poverty, and away from income support. We should all be
concerned that our income support spending over the past six years has increased 60 per
cent. Today nearly two in five Nunavummiut use some form of income support. We need to
break these chains of poverty. Think of what would be better. Less food insecurity, better

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health, better grades in school, better paycheques, fewer problems with drugs and alcohol,
less family violence. Its all related to poverty, and we must find a way out.

Education is our top priority. It is the key to developing people with technical, scientific and
professional skills. These are essential in the modern economy. Without these skills, without
these skilled people, we will not get far in the modern world.

Look back to the Auditor Generals report in 2010. At that time, roughly ten years into our
territorys existence, we had focused on hiring Nunavut Inuit. We aimed then, as we do
now, to create a civil service that reflects the population that it serves. But the Auditor
General pointed out that our approach would need to change. Sheila Fraser told us we
needed people who are, in her word, qualified to provide government programs and
services.

Look back even further. Eleven years ago, Justice Thomas Berger said it is impossible to
consider the objectives of Article 23 of the Nunavut Land Claims Act without considering
that a vast majority of government jobs have educational qualifications.

That was why our government, beginning with the Third Assembly, set out to address this
skills issue through our human resources strategy. And I will say more about that strategy in
a moment. The main solution to the issue lies in improving education.

Lets celebrate the news that our schools are graduating more students. At the same time,
let us also recognize that too many Nunavummiut leave high school without a diploma.
Passing grade 12 is the foundation for future success. In this budget we will invest $850,000
to improve support services in our schools. We will help families to support their kids
education. We will improve early childhood education programs, improve Inuit Language
teaching in elementary schools, and hire more Inuit teachers.

We will train young men and women for government careers. Our internship program is
part of the answer. So is our Summer Student Employment Equity program. Last summer,
the government hired 249 students across the territory. Thats a good-news story. This year
we want to hire even more.

We will improve labour-market training for adults and help them prepare for better jobs.
We will give Nunavut Arctic College an additional $1.3 million to help fund its Social Worker
and Early Childhood Education programs. The College will also help Nunavummiut to
become better entrepreneurs and stronger managers. And, starting this fall, it will launch a

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four-year law program, in partnership with the University of Saskatchewan, to graduate
lawyers who know our territory. That law program represents a $1.6 million investment.

Through all of these measures, we are helping Nunavummiut to take part in the market
economy. We are also working to make it easier for Nunavummiut to grow their businesses
through sales to this government. The new NNI policy takes effect April first. The
government will launch a plain-language guide that explains the new rules. And well run an
awareness campaign so that people know how they can do business with us.

The Department of Economic Development and Transportation will receive $2.5 million
next year to help communities to build more access roads, and to improve dust control. At
the same time, the Environment Department will begin work to update the Nunavut Sealing
Strategy. It will improve both the Commercial Fish Freight Subsidy program and the
Fisheries Development and Diversification program.

In the tourism sector, we will begin a program of targeted training and certification, and
develop a new strategy to promote our cultural industries. And we will improve support for
the Nunavut Arts and Crafts Association, and the Film, Television and New Media program.

And we will continue support for responsible and sustainable petroleum exploration in
Baffin Bay and Davis Strait. At the same time, we remain very concerned about the federal
governments ban on new licencing in Arctic waters. As the Premier stated in December, it
is critical that Nunavummiut are part of the discussions about our economic future.

This is yet another reason why we look forward to progress in our devolution negotiations.
Self-government compels us to gain greater control over natural resources. We cannot
afford to have more surprises, like this ban on developing resources we consider to be our
own.

Stronger people and communities

As we open the doors to a strong and prosperous future, we are also concentrating on
strengthening our communities with healthy families and individuals.

This budget provides the Health Department with $353 million dollars next fiscal year.
Thats $12 million more than this year. Its a rise of 3.5 per cent. It represents this
governments single greatest expenditure. Our focus remains on healthy living, injury
prevention, and helping people to overcome substance abuse and addictions.

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Improved mental wellness is essential to our success. That is why our government has given
the Health Department $6.6 million to set up the Quality of Life Secretariat. This new unit
will support community and wellness organizations. It will also operate mobile trauma
response, support the Embrace Life Council, and help fund a 24-hour crisis help line.

Mental wellness also accounts for most of the $3 million in new funds for health-care
service delivery. We will expand community-based services for mental health and
addictions.

In addition to supporting individuals, we are strengthening our communities. We will help

them to deter drug dealers, bootleggers, and the other criminals whose actions hurt
peoples health and safety.

Our efforts take on extra significance this year with the opening of a beer and wine store in
Iqaluit. As the Minister responsible for the Liquor Licencing Board and the Nunavut Liquor
Commission, and the Minister of Justice, I have a particular interest in this matter.

As this house knows, the government issued a detailed plan last October on steps to reduce
the harm of alcohol. As the Nunavut Liquor Act Review Task Force said, freer access to beer
and wine is a way to disrupt bootleggers, and to reduce the harm caused by binge-drinking
hard liquor. Our new beer and wine store is another step in harm reduction. We will use
further harm-reduction strategies, including an awareness campaign to encourage healthy
and informed choices.

Strengthening communities also means keeping them safe. The RCMP signed a shared
direction agreement with our government last fall. They made a commitment to provide
services that are efficient, effective and culturally relevant. And we agreed to review our
work so we will all know if we are meeting our objectives.

The RCMP are concentrating on three areas: communication, communities at risk and crime
reduction.

Guided by this agreement, the RCMP will put nine new constables on the streets in Cape
Dorset, Pangnirtung, Baker Lake, Arviat, Rankin Inlet, Gjoa Haven and Iqaluit.

As well, the Mounties will continue to work closely with our communities. Theyre focused
on communicating better in the Inuit Language, improving our criminal intelligence system,
and upgrading crime-prevention programs. The RCMP and our government are helping
Nunavummiut to understand the risks from alcohol and drugs.

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Addictions, substance abuse, and mental illness all strain our court system. Rising caseloads
mean people wait longer for justice to be served. We will expand the Justice of the Peace
program into more communities, and by offering training and other supports to our Justices
of the Peace so we can resolve cases that dont require involvement by a judge. We will also
provide more programs and support services for victims of crime.

At the same time, we will step up funding to the Community Justice Program. We are
helping communities to lead restorative justice efforts that help victims, hold offenders
accountable, and address the root causes of crime.

Improving government

Now that weve talked about strengthening our people and our communities, and about
developing a stronger economic future, let me focus now on the government itself. After all,
we have work to do so we can deliver our programs and services efficiently and effectively.

We said in Sivumut Abluqta that we would review government programs. We wanted to see
which worked well, which needed fixing, and where we should concentrate our resources.
We completed many reviews. Each department received recommendations for
improvement. Now departments are working with the Department of Finance and the
Department of Executive and Intergovernmental Affairs to review how we manage shared
services. That includes human resources, our computer systems, and our procurement.

Perhaps our most significant review focused on our Human Resources Strategy. After all,
the efficiency and effectiveness of government will be highest when we have the right
person, in the right job, at the right time, making the right decisions. Thats what we need
to deliver the highest quality programs and services within our limited resources.

Three years ago, we established the Human Resources Strategy. We said we would increase
Inuit employment, recruit skilled people, develop our employees, and improve our service
to the public. We also said we would gather better data for making decisions. We are
working on all of these things.

We have made several improvements. We have introduced a policy on workplace

harassment. We are providing anti-harassment training that promotes a respectful
workplace, and have trained nearly 500 employees to date. We are better supporting
individuals who return to work, and are training our managers about their responsibilities to
accommodate employees needs. We are supporting breastfeeding mothers in the
workplace. We have appointed an Ethics Officer. We are developing programs to train and

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support employees, and to develop and engage managers and leaders. We will become an
employer of choice.

The bottom line is that we are making significant progress in improving our human
resources, including staffing, training and Inuit employment. We will see that anyone who
works for the government, or applies for a government job, is treated fairly and equitably.

On staffing, I can report that Inuit employment in government remains around 50 per cent.
The actual number of government-employed Inuit reached 1,762. If one looks back a few
years, to 2009, one will see that the number of Inuit holding government jobs has risen by
257. In other words, the number of Inuit working for the government has risen. We
continue to make progress.

Little more than a year ago, this government introduced restricted job competitions, making
it easier for Inuit to join the public service in their home communities. Our successful
internship program provides Inuit employees with on-the-job opportunities to acquire
management skills.

Last fall, EIA reorganized the Sivumuaqatigiit Division to focus only on meeting our targets
for Inuit employment. The Public Service Training Division is reporting strong Inuit
participation in its leadership program, almost 80 per cent. Just last week, 15 participants
successfully completed the Senior Managers stream of the program. At the ceremony,
Dalhousie University agreed to recognize graduates of the program with course credits at
the postgraduate, or Masters, level. These types of partnerships create even more
opportunities for our public servants to advance their training and development.

Yes, we have a way to go before the public service fully reflects the people that it serves.
Yes, we have our challenges in finding the right people, and I talked a few minutes ago
about how our education system will help fill that gap. The important thing to remember is
that we are making progress. And we will continue to work towards becoming a
representative public service.

Conclusion

Mr. Speaker, while Im talking about the public service, Ill just mention that Im grateful to
the many public servants who have helped shape this fiscal plan. I want to express my
appreciation to all departments, agencies and territorial corporations. And, in particular, I
thank my team at the Department of Finance.

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As I said at the beginning, this is the ninth budget Ive brought before this house. It is also
the last Budget Address that I will deliver in this Fourth Assembly.

Looking back over this Assemblys work, our prudent approach to public money and
property has been proven correct. We have steadily improved the programs and services
that we provide to Nunavummiut. Large challenges remain, especially in housing and
infrastructure. But we are increasingly able to meet these challenges by strengthening our
people, our communities, our government and our economy.

We are delivering what this Assembly set out to do four years ago, and thats to build a
better future for the people we serve.

Thank you.

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