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Close to 4,000 jobs were lost this year in the NWT because of the pandemic, although most of those losses were among non-residents, Finance Minister Caroline Wawzonek said during a technical briefing with reporters on Monday.

While it’s projected that the number of NWT jobs will return to almost 90 per cent of pre-pandemic level by the fourth quarter of 2020, that return won’t be equitable and could mean more jobs shifting from full-time to part-time, and some sectors such as tourism will take longer to recover than others, Wawzonek explained.

The GNWT should focus on expenditure management for its fiscal sustainability, said Finance Minister Caroline Wawzonek in the legislative assembly on Friday.
GNWT image

Job losses weren’t as severe as initially anticipated because many sectors dealt with Covid and the precautionary health measures by keeping on staff and reducing hours, and the large government sector insulated the NWT from more layoffs.

About 81 per cent of job losses since the start of the year were in the services sector, with tourism-related employment declining sharply, in contrast to January 2020 when tourism was rising.

Comparing June 2019 with June 2020, all industries in the services sector declined except for grocery stores, which registered a slight rise. The hardest hit sectors were in accommodations, restaurants and bars and other tourism services.

The GNWT will pay for its pandemic response costs by reducing its operating surplus, Wawzonek said when she opened Friday’s session in the legislative assembly.

The 2020-2021 operating surplus “is projected to narrow a full $143 million on the February 2020-2021 budget to $60 million,” she said.

Wawzonek said the Covid-19 pandemic has driven up government expenditures and there will be more than $175 million in new costs related to emergency measures, added health care costs, income assistance and other forms of economic relief for people, businesses and communities.

Tourism-related jobs experienced the steepest losses during the pandemic, according to GNWT data. GNWT image

That spending breaks down into $31.7 million for the Covid-19 Coordinating Secretariat, $72 million for other health costs such as testing and health care system supports, and $72 million for economic supports.

The $92 million the NWT will receive in federal support will reduce the net effect on GNWT coffers to about $83 million, she said.

Wawzonek explained that expenditure management, rather than expenditure reduction, must become the “main pillar” in putting the GNWT onto a sustainable fiscal path.

The finance minister told reporters in her briefing on Monday that expenditure management would mean redirecting GNWT funding to uses suited to pandemic priorities.

“I’ll give you an example from (Industry, Tourism and Investment)… money that would normally have been spent on the large marketing initiatives, maybe that is not an expenditure that you want to be doing right now. But you might be looking at ways to support the industry. A lot of the departments, I think, they’re going to be looking at what other savings are they finding internally, that maybe they’re not spending? Travel comes to mind, and where they can redirect that.”

While the pandemic has created pressure for more spending, the GNWT has also been receiving fewer revenues.

Corporate income taxes and resource revenues are expected to continue declining into 2021 and are already down by $21 million and $30 million, respectively. A lack of profits from diamond mining has reduced royalties to the GNWT.

The government waiving airport fees, bridge tolls, leases and other fees at the start of the pandemic has cost the GNWT $10 million in foregone revenue.

One remedy for the revenue decline will be Territorial Formula Financing (TFF) grants from the federal government, which have a two-year lag and can take four years for the full benefit to be felt.

By 2024-2025, TFF would compensate declines by about 70 per cent, except for downturns in resource revenues, Wawzonek said.

Despite the stress on revenues, Wawzonek said “the fiscal situation remains stable” due to federal support that has helped boost this year’s revenues to $2.2 billion, which is $34 million higher than was estimated in the 2020-2021 budget.

However, on the NWT’s current course, the federal borrowing limit of $1.8 billion would be exceeded by the next legislative assembly, leading to an operating deficit in three years if the course isn’t adjusted.

“Although the new $1.8 billion limit will provide $538 million in borrowing capacity at year end, we need to be conscious of the risks of carrying too much debt,” she said. “Covid-19 is not an excuse. We must focus on the difficult choices we need to make to live within our means while providing the programs and services that NWT residents need, especially within the context of Covid.”

She acknowledged that the Covid-related expenditures “are not good news,” but lauded the GNWT’s track record for fiscal responsibility, as she said was demonstrated in the summer when Moody’s Investors Service confirmed the territory’s AA1 credit rating for the 14th consecutive year.

Moody’s released its assessment in July, with the NWT’s rating among the highest of Canadian jurisdictions.

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Blair McBride

Blair McBride covers the Legislative Assembly, business and education. Before coming to Yellowknife he worked as a journalist in British Columbia, Thailand and Ontario. He studied journalism at Western...

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