The last budget of the 19th Assembly has been presented and the NWT is in trouble and there is no plan.
It will be up to the 20th Assembly to sort it out. We all need to engage; our future and way of life depend on it. The cold hard facts from the 15-page economic review attached to the budget address are:
-Our economy is in serious decline
“The recovery from the pandemic returns the economy to its pre-pandemic path of slow decline.”
“Despite a strong rebound in 2021” (fueled by federal government pandemic economic support funding), “several years of decline will leave the NWT economy nearly nine per cent smaller in 2023.”
According to the Macroeconomic Policy Framework developed in 2007, seven of the 13 performance indicators have fallen since 2007, signalling economic decline. “These include real GDP, productivity, new investment, imports, wholesale trade, and resource sector services.”
“Real GDP is projected to shrink by 2.9 per cent in 2023…”
It is more expensive than ever to invest in the NWT. Higher interest rates make borrowing more expensive and increase the risk of loan defaults.
High costs are crippling
“High inflation is eroding the purchasing power of NWT residents and exacerbating the already elevated cost of living and doing business in the North. Consumer price growth is projected to outpace wage growth in 2023, thereby muting real wage growth for workers… Households and businesses are likely to reduce or delay purchases while prices rise. This will lead to less economic activity.”
“This could lead to increased costs of living and doing business, lower consumer spending and investment and reduced export values. Taken together, these could cause economic growth to decline further than currently projected.”
There is no plan
“…failure to prepare for inevitable structural shifts to the NWT economy, such as the closure of the remaining diamond mines within the next decade, poses a more significant threat than the short-term economic disruptions.”
“Diamond mining is a primary driver of the NWT economy but currently producing mines are all set to end production by 2030.”
“This outsized reliance on two industries creates structural barriers to long-term growth and stability by making the economy inefficient and uncompetitive. This is the primary downside risk…”
“…there are no mining projects on the horizon large enough to fill the gap in economic output and well-paid jobs that will be left by the diamond mine closures.”
“Structural challenges specific to the NWT include ongoing labour shortages, a lack of economic diversification and maturing diamond mines. These challenges pose both immediate and long-term risks to the NWT economy.”
“Labour shortages pose short-term and long-term risks to the economic outlook…”
“Vacant positions mean businesses cannot maintain or expand operations. This reduces the quality of life for NWT residents as services become limited or unavailable.”
We lose almost one-fifth of income. “Total aggregate earnings paid to non-resident workers ranged from $275 million to $440 million between 2008 and 2018. This could have been spent in the NWT economy.”
There is too much government
The GNWT employs 6,500 NWT residents, or a third of all NWT employees.
“For the first time, there are now more residents employed in the public sector than in the private sector.” A total of approximately 12,000 residents are employed by governments. “Government administration at all levels (federal, territorial, municipal, and Indigenous) is the largest industry in the NWT, generating over a fifth of economic output,” but the outsized economic footprint of government causes labour shortages.
“The combined services-providing industries now account for nearly three-quarters of NWT GDP compared to 48 per cent a decade ago.”
“Increasing dependence on the public sector risks stifling private sector growth and innovation…” and creating a “hollowing out of the private sector.”
Our government appears incapable of fixing itself.
The good news is the NWT is filled with smart, skilled people who can help. The 19th Assembly should consider striking a blue-chip commission, made up of qualified Northerners, with a focused mandate and tight timeline, to develop a plan for the 20th Assembly for consideration, so it has a starting point. Time is of the essence.
Michael Miltenberger is a former longtime MLA and cabinet minister residing in Fort Smith.