Thank you.
At the Whitehorse Chamber of Commerce the following questions are being asked: Are we business ready? Are we business friendly? What markets can we compete in, and when, in the global economy?
Based on a lack of outside private sector investment this past year, the answers to questions one and two are no. As do many northern regions, we continue to struggle with attracting skilled human capacity, we struggle with high housing costs, and we struggle with the high cost of transportation.
In the Yukon, our economy is government, and the majority of our private sector resources are focused on servicing this economy. We have little incentive for promoting growth or infrastructure, both human and capital, to support the larger private sector investment initiatives. Instead, we remain dependent on the financial generosity of Ottawa to continue funding our quality of life that has become equal to the bigger cities across Canada.
Our largest fear is the reduction in transfer agreement payments, which would decimate our economy. As a region, we are not focused or working together toward a common economic development plan that will enable Yukon to become self-sufficient. In many cases, our largest groups--mining, tourism, and environmentalists--work against each other. This adds to the complexity of doing business in our region and is especially true for projects like mining, which ironically for Canada, after energy projects, is our second-largest export industry.
For current outside investors in our region, it is not uncommon these days to see these investors pulling back from the Yukon as we fail to resolve our threats to business and market failures. In Whitehorse, our prime waterfront real estate remains vacant, as do large plots of commercial space and offices. The majority of our construction in the territory is focused on building more government buildings that our minuscule tax base will struggle to cover, both operational and maintenance costs.
Taxes for the city of Whitehorse alone have risen 23.4% in the past years. Although these taxes are some of the lowest in the nation, these increases show outside investors that we have no governance fiscal spending discipline.
The risks are high for successful investment in the Yukon. Our small population and our high transportation costs make it difficult for small businesses to compete against the high-volume stores, where lower prices usually win. Add together increased costs of local regulation, unreliable utilities, ever-increasing taxes, and local government competing for labour, and it equates to the extinction of our small population of commercial business owners.
In these worldwide difficult economic times, we are at a disadvantage to compete for large global investment dollars. At present, it appears we are only able to attract large private sector companies if they are able to have legalized monopolies in our regions. For those new businesses that have committed to the Yukon and are under construction, they are competing with government projects for our precious yet limited supply of skilled trade labour.
In the Yukon's current budgets for economic development dollars, INAC's contribution to this pool is 2%--which is going to be the new CanNor--which INAC strategically delivers to 14 competing communities. INAC's regional office approach to distributing their funds has been to select projects that would provide return on investment or have the greatest economic impact to a region of the Yukon. The larger pools for economic development are the Yukon government, consisting of economic development and tourism dollars at 17%, and Infrastructure Canada at 81%. These two larger pools are delivered largely not by strategic initiatives to make the Yukon a better place to attract business, but as a result of political pressure. Often these projects do an exceptional job at creating economic opportunities and wealth for locals in the region, but, like the 2007 Canada Winter Games, leave more debt once completed than economic benefit.
Over the past several years, Ottawa has invested hundreds of millions of dollars in the Yukon with very little impact to creating an environment where both business and people can flourish. This occurred largely because the moneys are not tied to specific plans for building long-term commerce. Our dollars distributed for strategic impact are too small and the politically driven dollars are too high.
To complicate the problem, federal programming is designed in Ottawa by technicians who have limited experience in rural communities. The result is often a disconnect on how program dollars can be used versus implementation that will work in our limited human resource environment. We are ever hopeful that the new Canadian Northern Economic Development Agency will help to reduce these program design flaws.
In closing, Canada and the Yukon need to strategically identify specific industries in which the Yukon can compete in the global marketplace. It needs to be one or two industries. Once identified, we need to build an environment that will attract investors from these industries, yet look out for the long-term interest of the nation—i.e., environmental issues. An economic development plan needs to be developed that focuses on building this environment for business. Economic development dollars would be strategically assigned for implementing each element of the plan and not allocated by political whim.
For the city of Whitehorse, we as a community need to focus on building efficient government and manage our tax base cost, keep housing affordable, and then create an environment where we are able to attract and retain the right skill sets and businesses to implement both Canada's and the Yukon's plans. Most importantly, as a city, we must create an environment where small and large commercial businesses can flourish and grow, as these are the businesses that will create greater wealth for Canada's future. As our main source of revenue, though—transfer payments—Canada needs to create funding requirements that ensure we as a city live up to our commitments to the nation.
Thank you.