Finance Committee on April 4th, 2017

[Robert R. McLeod]

That's right, and in our mind we aspire to having the same kind of co-management as they do in Newfoundland and Nova Scotia, but we are still waiting. There was a trigger that was negotiated as part of the devolution agreement. The negotiations were supposed to start six months after devolution had been implemented, and it's been over two years now.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Retaining young people in your communities is one issue you mentioned. Thanks to the Library and our analysts, we have figures according to which a large proportion of workers in the Northwest Territories come from another province and are interprovincial or interterritorial workers. You also mentioned that there is a problem with retaining your young people.

In your opinion, what would be the best way of approaching that problem, in order to try to provide jobs to the residents of your territory and not to people who come from elsewhere, and also to try to retain your young people?

[Robert R. McLeod]

The Northwest Territories is the only jurisdiction in Canada whose population has been declining for the past 10 years. New Brunswick joined us in that club for a few years here and there, but we're the only jurisdiction that sees its population decline. It's not by much. At most it's maybe 400 or 500 a year. It is very concerning to us because it affects our funding. A large part of our formula financing is based on population, so we've been looking at ways to increase our population.

When we look at our small and remote communities, we have 50% or 60% unemployment, and when you look around Yellowknife, anybody who wants a job can get a job. There is probably 100% employment, but the skills don't match up. We still fly in and fly out probably anywhere from 2,000 to 3,000 workers every year to work at the diamond mines. We haven't been able to resolve that. People who fly in leave. If you live in the north and work in the diamond mine, there's a $25,000 yearly northern allowance, and people who fly in are forgoing that. They would rather live in the south and forgo that.

We have looked at a lot of different ways. We have the best student financial assistance program in Canada. We want our students to come back. A lot of them come back for two or three years until their student loans are paid off and they get experience. The north has a lot of good jobs where young people can get a lot of experience. They get very marketable skills and they're snapped up. After they work for three or four years in the north, they can get a very good job in the south. We have what we call the two-and-four phenomenon as well. We have young professionals who come north by themselves, find a partner, and have kids. Then they realize grandma and grandpa are a long way away and they move, so then you have four people who move south.

I guess, to make a long story short, we think the best way to increase our population is by immigration. We have a quota, and our immigration is increasing every year. We've been to China quite a few times. We think the Chinese are very interested in immigrating, but it takes a long time to process their papers. Those are the kinds of things we're looking at.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I have often heard about issues the Nutrition North Canada program tries to address. Is the cost of foodstuffs in the North still a problem? In your opinion, is the program satisfactory, or should it be improved?

[Robert R. McLeod]

Nutrition north is a program that helps the people of the Northwest Territories and the other territories. Food insecurity is starting to be a very big problem. When we were growing up the only way people who lived in the small communities could survive was by traditional harvesting off the land. They'd catch all their food. They would hunt and fish and trap. Now some of the wildlife populations are at risk. For example, caribou used to be a mainstay of people's diets; now we ban by almost 100% the hunting of caribou. We have a small number of tags that we make available to the Tlicho and the Yellowknives Dene people. For the most part, people have to go and buy their food from the store or grow their own food. If you buy food from the store, it's very expensive. Steaks and pork chops are not cheap.

Nutrition north has had some issues, but certainly it helps the people of the north survive.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you both.

Mr. Fergus.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you, Mr. Chair.

I would also like to thank the Premier of the Northwest Territories for being here with us.

It is always a pleasure to welcome you to Ottawa.

I would like to ask some questions, but first I will yield the floor to the member for the Northwest Territories, Mr. Michael McLeod.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you.

I welcome the opportunity to ask you a few questions.

A very informative presentation. You flagged a number of the issues that challenge us in the north. The issue of growing our economy is an important one. We know that our smaller communities have challenges in terms of out-migration and communities are shrinking in size. We have many social issues across the north. In some of our studies we recognize that suicide is a symptom of the level of despair that has been created. We're seeing, on average, in the three territories a suicide every 10 days, and in the Northwest Territories it's every four to five days. The state of the economy has a role in this and is factored in.

We need to address a number of things. You flagged some of them that are causing problems. The low population numbers result in lower numbers of investment in the north. We have the issue of land claims that are outstanding and self-government issues that are outstanding and need to be resolved, and the lack of infrastructure. But we also have the issue of funding that is based on population, and I wanted to raise that one first.

Perhaps we could just talk a bit more on how we could benefit from base-plus funding rather than population-based investment.

[Robert R. McLeod]

I was very pleased to see, in the latest federal budget, that they have committed to base-plus funding. This is an issue that has affected us in the north, not only in the Northwest Territories but in all three northern territories. It's been a continuous requirement to have per capita funding. For example, on the infrastructure funding, because we have a very small population, to do it on a per capita basis we might get a couple hundred thousand dollars to build roads. It might allow us to build maybe half a kilometre of road with that approach. Similarly, with health care almost every program we deliver is on a per capita basis. We get a very minimal amount of funding, although we're in the highest-cost environment in Canada.

Base-plus allows us to deal with specific issues. It allows us to build a road, if needed. It certainly allows us to have a health care system on par.... I wouldn't say it's on par now with the rest of Canada, but it certainly allows us to have a health care system where people can access health services even in some of the smaller communities. It also allows our children to have an education so that they can aspire to whatever they would like to aspire to.

We still have a lot of social issues. We spend 70% of our budget on social programs, and we still have significant issues with suicide. We still need to spend a lot more on mental health, obviously.

[Michael McLeod, Liberal, Northwest Territories, NT]

My next question is on the issue of a borrowing limit. You indicated that we're not quite at our limit, that we have some room, but there is so much in terms of infrastructure need, and we have a huge infrastructure deficit. The federal government still has a program. We still rely on cost sharing. Historically the percentage sharing has been 75:25.

You mentioned some projects in here: the Mackenzie Valley highway, the Slave geological province, and Taltson Hydro. With the room you have left in the borrowing limit, and with the cost-sharing formula, will you be able to do all three? Will you be able to accommodate a number of these, or one of these, with what you have left? The Mackenzie Valley highway, if we did the whole thing, would be well over a billion dollars. I think it's $1.7 billion.

[Robert R. McLeod]

Our fiscal strategy took that into consideration. I think our borrowing limit during the 15th assembly was $350 million. When we built the Mackenzie Valley bridge, we were able to increase our borrowing limit to $500 million, I think. When we built the Inuvik-Tuk highway, we wanted to be a partner but our borrowing limit was hampering us. We were able to increase it to $1.3 billion.

Our fiscal strategy, for the first two years of this government, our 18th legislative assembly government, has been to have budget reductions so that we would be in a situation where we could invest in infrastructure. If we get all three of the infrastructure projects that we've been talking about, we think we'd more than likely, depending on the percentage of investment required, also look at, as we've done in the past, a strategy of asking to increase our borrowing limit.

We think we have a responsible government. We have responsible financial managers. Our credit rating from Moody's is AAA, so we question the need for a borrowing limit, but we're prepared to play by the rules. If we're in that good position of having all of those infrastructure projects approved, we would seek to have a borrowing limit increase.

[The Chair, Liberal, Wayne Easter]

Thank you both.

I would just say on the base-plus funding, Nunavut, the Yukon, the Northwest Territories, and P.E.I. all have seen pretty strong value in that, because the fact of the matter is that without the base fund, those areas would just fall further and further behind. I certainly agree with you on that point.

Turning to five-minute rounds, Mr. Liepert is first, please.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Premier McLeod, thanks for being here. Bob and I go back a long way, obviously, given the affinity between Alberta and the Northwest Territories.

Premier, there are a couple of things that I want to pursue. I guess it's more looking at what the federal government can do in terms of investment to open up the north, versus all of the things that we would traditionally think about spending money on in terms of infrastructure.

The first question that comes to mind would be this. Are there opportunities with technology—investments in technology—that could open up opportunities for the north? I mean, the reality is that the jobs of the future are going to be tied to technology and not to the hands-on type of work that we've seen in the past. I'm wondering whether it would be wise to emphasize that over the next 10 to 20 years. The federal government should look at how technology could open up the north with investments.

[Robert R. McLeod]

That's certainly an area that we've always felt could be a way of the future. Our government has just completed spending $90 million on the Mackenzie Valley fibre optic link to connect all of our communities up and down the Mackenzie Valley, so that certainly will improve.

We think that in a number of very high-cost areas, innovation will reduce the cost, for example with long-distance education and long-distance health. With the technology nowadays, some people say it doesn't matter where you're located. People have asked, what would you do? We've gone through exercises where we ask what you would do if there was no mining in the north, for example. What would you do? There have been a lot of different ideas. Perhaps you could have call centres. If you can have call centres in India, why can't you have them in the Northwest Territories?

Reading the paper, I see New Brunswick is very interested in getting into the cannabis industry. Maybe there are opportunities there. We know you can grow it in the Northwest Territories.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

The reason I say that is that in Alberta, it seems like when people move to the north, there's a tendency in many cases to want to stay there. It's not like people don't want to live in the north. It's just that when they move to the north, the opportunities to stay there in terms of future employment are limited.

The other area that I wanted to maybe talk a bit about is the diamond mines and the fly-in, fly-out. It's always been a big issue in Alberta—not so much anymore but with the oil sands—to fly in and fly out. It's terrific that we have the business investment, but at the end of the day, many of those same people.... I could imagine situations in Yellowknife where it would actually benefit people to leave Yellowknife and move to Edmonton to work at the diamond mines, because there'd be fly-in and fly-out available in Edmonton, whereas there isn't in Yellowknife necessarily.

We're going through a tax review right now. Have you thought about having discussions with the finance department to see whether jurisdictions like yours would have the opportunity to benefit from some of that personal tax that today doesn't go to your government but back to the jurisdiction where those employees happen to live, while you bear the costs of things like health care and other things if those workers are injured? Have you had any discussions with the federal Department of Finance in that matter?

[Robert R. McLeod]

We've had a lot of discussions with the Department of Finance in a number of areas. An obvious one is that the more people we have in the Northwest Territories, the more money we get through the formula financing arrangement, so that benefits us.

On the cost of living, the northern residents deduction has increased by 33%, so that will help. We also have a payroll tax, which we instituted several years ago. I think it's at 4%. We were thinking of increasing this to 10%, but it becomes a problem because the federal finance department has said, “You can jack it up, but you're going to have to collect it yourself”. They're not going to collect it for us. We found when we looked at it that the cost of collecting made it not feasible for us to do.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Does that apply to the fly-in, fly-out folks?

[Robert R. McLeod]

Yes.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Okay, I didn't realize that.

[The Chair, Liberal, Wayne Easter]

This is the last question.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

About a year ago, if I recall, there was a Supreme Court decision relative to Métis jurisdiction and how the federal government treats Métis versus aboriginal. Has anything happened as a result of that Supreme Court decision that has been of benefit to your jurisdiction?

[Robert R. McLeod]

Not yet. I think they are still waiting. Most people figure it will take a couple of years for the federal government to respond, but in the Northwest Territories we've been dealing with the Métis as if that is already in place. We've been paying for Métis health benefits for at least 15 years now. We have an invoice ready to send as soon as we find out what the federal government's decision is with regard to Métis benefits, at least health benefits.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

Mr. Ouellette, you have five minutes.