Thank you very much, Mr. Chair.
Good afternoon to the vice-chairs and the other members of the committee as well.
Thank you for the invitation to appear before the committee today to discuss economic growth. We appreciate the committee's attention and focus on the north. I would also like to give my thanks for the opportunity to speak to the economic growth and well-being of our communities in Yukon in general.
All Canadians have a vested interest in a strong and robust north. Canada's overall economic position absolutely improves as the north develops. The reality is, Canada's north is a bigger picture of our national identity and economy than it has ever been in the past. New economic opportunities are opening up across the north, through both Arctic and subarctic regions. Across all three territories, you'll find a wide range of economic drivers, each with its own unique benefits and opportunities. These opportunities present themselves as the obvious drivers, like access to resources, but also as strong collaboration among territorial, municipal, and first nations governments.
In the north, first nations governments are both leaders and partners in our economic prosperity and diversity. In Yukon, that is absolutely no different. Since 2004, Yukon has enjoyed significant economic growth, as measured by real gross domestic product. Between 2004 and 2013, Yukon experienced 10 consecutive years of real GDP growth. The real GDP grew by over 50% to $2.3 billion. A steadily growing population was experienced, as well as unemployment rates that were generally lower than the Canadian averages, a relatively strong labour market, and income growth. Supported by strong commodity prices, Yukon was largely insulated from the financial crisis of 2008, unlike southern Canada.
In recent years, however, that picture has changed. Both 2014 and 2015 saw significant contractions in Yukon's economy. There was a 0.2% contraction in 2014, and a 6% contraction in 2015. The underlying cause of these contractions can be most easily explained by a decrease in mineral prices, leading to a decrease in mining exports and the suspension of large-scale mining projects. While we enjoy economic benefits associated with access to minerals and resource deposits not found in some other jurisdictions, we also face challenges not present elsewhere in Canada. I will speak to that more in a minute.
I want to draw the committee's attention to the fact that GDP may not actually be a perfect measure of growth for the territories. In most jurisdictions, gains in real GDP are closely tied to gains in other variables, such as employment, population, and retail sales. Under normal circumstances, an increase in real GDP is generally interpreted as a sign that the economy is doing well, while a decrease indicates that the economy is not necessarily working to its full capacity.
In Yukon, the correlation between GDP changes and other indicators has often not been so strong. This is related to the small size of the territory's economy. One large mining project, for example, has the potential to significantly impact the GDP from one year to the next but may have less of an impact on other key indicators, such as employment, labour force participation, and income. For example, the significant 6% decrease in real GDP from the previous year that was experienced in Yukon in 2015 had no effect on the size of the labour force in the territory. During that time, the total retail trade in Yukon actually grew by almost 5%, with the contraction of the real GDP. Therefore, we must consider numerous additional factors when assessing growth. Yukon must work to diversify its economy in order to ensure that the growth is sustainable year to year and to protect it from the volatility of the resource production industry.
While we recognize the long and rich history associated with mining, we must also rely on economic drivers beyond a strong resource sector. Left unchecked, Yukon's economy may be destined for some rough times ahead.
With the expected suspension of mineral production at Yukon's only current active mine, now more than ever Yukon needs to get its house in order.
While Yukon is encourage by forecast growth in its retail and construction sectors, volatility of the mining crisis reaffirms the need for it to diversify its economy.
There are encouraging signs of expansion in other industries as we look at the forecast into the next few years, but we need to ensure that the foundation is in place for businesses to grow and to expand. Reliable Internet, better public infrastructure, energy security—these are the fundamentals.
So, where do we go from here? For Yukon to be seen as having sustainable growth now and into the future, we must take action in the following ways.
First, Yukon imports the majority of its necessities from the south. In 2015, for example, this translated to about $1.8 billion in imports. This is a significant drag in GDP and makes Yukoners more vulnerable to disruptions in the global supply. Increasing Yukoners' ability to produce what they need in the territory will help to mitigate this risk.
Next, Yukon requires strong connectivity with the rest of the world. Access to fast and reliable Internet would be a significant boost to making Yukon a more attractive place for businesses and would allow those businesses that are already there to succeed. Now more than ever, mining is a technology play as much as it is a natural resource play. With better access, Yukon would be better able to build its natural resources and knowledge economy, and to position itself to be a leader in northern innovation. With better connectivity to the global economy there are opportunities to grow industry that isn't dependent upon physical location. A lack of speed and redundancy undermines the reliability of our Internet in Yukon, and it significantly constrains businesses and the economic growth and diversification.
As you can see, these items go hand in hand. To succeed in one is to succeed in the other.
Government sees itself playing a role in this endeavour. We are taking steps towards exploring the feasibility of a second fibre optic line in the territory. We also recognize and support businesses already established in the territory. The most fundamental component of our future growth and prosperity is the recognition and the enhancement of the roles of indigenous governments, development corporations, and businesses and of how they play in the Canadian and in the Yukon economy, particularly in the the rural community. Yukon first nations development corporations and businesses are rising stars in Yukon's economy. First nations governments are a major employer and economic driver in all of our communities.
An example of how Yukon first nations are leading the way in developing local economy is the success of Air North, Yukon's airline. The airline is now half-owned by the Vuntut Development Corporation of the Vuntut Gwitchin people of Old Crow.
Another example is the success of the Carcross Commons, a retail village that was developed by the Carcross/Tagish First Nation's development corporation. Also with the Carcross/Tagish First Nation was a tiny homes project, an employment and skills development project.
Truth and reconciliation means that we advance a vision for diversifying our economy, and that vision must be inclusive of the development and collaboration of Yukon first nations, governments, and economic development corporations. Yukon first nations governments are both leaders and partners in Yukon's economic prosperity.
One of the central commitments of my government is to work collaboratively and respectfully with first nations governments to build strong, intergovernmental relations and a strong, diverse economy that brings benefits to all Yukoners. We recognize the essential role that first nations, Yukon first nations governments, and businesses play in the development and prosperity of a shared Yukon.
The modern treaties and self-government agreements in Yukon have opened many economic development opportunities. As the members of the committee are aware, 11 of Canada's 29 modern treaties and self-government agreements are located in Yukon. These agreements increase collaboration between our governments, reduce conflict, bring certainty that is attractive to investors, and have made first nations governments significant and savvy investors in local economies.
These agreements outline a shared vision for economic self-reliance and ways of sharing the benefits and economic development across our territory.
A critical role of all governments is to work actively and continuously to implement these modern treaties. Addressing the physical relationship with self-governing first nations is critical to the implementation of these agreements. It ensures that first nations are meaningful partners in the economy of Yukon, as was envisioned by these agreements.
Yukon first nations governments and the Government of Yukon have committed to working collaboratively to identify and to take actions for our shared priorities. We meet regularly at leadership forums to advance these priorities. As a recent example, the Government of Yukon and self-governing Yukon first nations have signed a memorandum of understanding, agreeing to work together to improve the management of mineral resources in Yukon. I firmly believe that this type of collaboration will make Yukon a more attractive jurisdiction for investment and will result in real and lasting benefits to Yukon's economy.
Members of the committee, the path ahead is not easy, as you can understand. In addition to the well-known challenges that I've raised, we are also set to experience greater challenges than we've ever faced before. Climate change is known to affect the north on a disproportionate basis, and we are already seeing the impact on our infrastructure as permafrost begins to thaw.
The Yukon government is proud to have signed the Pan-Canadian Framework on Clean Growth and Climate Change, and Yukon agrees with the framework's assertion that carbon pricing will encourage innovation and develop the foundation for a low-carbon and resilient economy. However, Yukon will need clarity from Canada, prior to designing a rebate program, on how Canada will adhere to the following principle related to carbon pricing that was used in the framework:
Carbon pricing policies should minimize competitiveness impacts and carbon leakage, particularly for emissions-intensive, trade-exposed sectors.
People of the committee, in Yukon, that is mining. This includes plaster mining, which is a key driver of the territory's local economy.
How Canada intends to fulfill this promise is very critical to the future of Yukon's economic success. However, we do recognize that some communities are still reliant on diesel power and that investment in alternative energies is difficult in smaller jurisdictions. It's very difficult for them to afford these initiatives.
This means that we must recognize and find a balance between reducing our greenhouse gas emissions and meeting the unique needs of the north, recognizing that support is needed to help Yukon develop alternatives to lessen its own carbon footprint.
We must also understand the economic impact associated with Yukon's lack of scale to provide similar services at the same costs as southern jurisdictions. Yukon must find ways to close the gap in order to maintain a robust and diverse economy.
Members of the committee, while sustainable economic growth is the goal of all jurisdictions, of course it's not without its own challenges. Yukon is working hard to start conversations and to address the challenges as it develops solutions that benefit all Canadians. It is through the co-operative and collaborative methods of the territorial government, and in working with provincial, federal, and first nations governments, that we will be able to make real and lasting improvements that benefit industry, the economy, all Yukoners, and of course, all Canadians as well. By strengthening Yukon's economy, we strengthen and solidify Canada's sovereignty in the north.
I would like to thank you all for the opportunity to speak with you today. I invite you to ask questions at this time.