1. The Northwest Territories 2010-2011 Budget: An opportunity for Today and the Future Overview 1. Context: citizens’ priorities, recession, long term

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The Northwest Territories 2010-2011 Budget: An opportunity for Today and the Future

Overview

1. Context: citizens’ priorities, recession, long term trends, government capacity

2. Recommendations

– Revenues

– Savings

– Spending


Context: Priorities

What do Canadians care about? Education, health, environment, fairness,

economy (when it’s down, not to exclusion of others)

Northern concerns similar, plus cost of living, others per 16th Assembly Priorities

There is a public demand for strong, effective public programs

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Context: Recession

Worst since Great Depression? Green shoots of recovery, or second dip? Will only know these things in hindsight What we do know:

– Workers and families feel the impact– Job losses continue after recession ends– Public spending is propping up economies

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Context: Recession & Policy

The non-ideological view– economists, bankers, international organizations,

finance ministers

Recession is part of the business cycle When down, stimulate. When up, cool it. Countercyclical monetary and fiscal policy.

– Monetary: Bank of Canada. – Only Territorial option is fiscal (spend/save).

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Context: Long Term

Details are not clear Some big picture elements are clear:

– Recession will end– Fossil fuels scarcer and costlier

Macquarie Bank (Globe Sept 16): peak oil

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Context: Fiscal Capacity

Three elements: Among strongest balance sheets in Canada Well under borrowing cap

– smart debt vs. dumb debt

New revenues capacity

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Government Spending as a Percentage of GDP

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

19992008


Budget Recommendations

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Revenues

Federal rules allow new taxes and tax rate increases with no clawback

Integrated package of reforms– Some up, some down (smart tax reform)

Social, economic, environmental improvements Raised tobacco, liquor revenues – good start

– Implement 2010-2011, phase in over 4 years– By year four, raise additional $54 million

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Savings

Two goals: year-to-year, and long term Year-to-year: countercyclical spending

– When economy hot, take money out (save it)– When economy cold, spend it– Economic Stabilization Fund (savings acc’t)

Long term: – When resource revenues decline– Territorial Trust Fund (RRSP)

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Spending – Short Term

Economists: no cuts: don’t even discuss No P3s:

– Expensive: profits, advertising, cost to borrow– Accountability: “offshoring” debt, commercial

confidentiality

No Privatization– E.g. ATCO shopping for new assets in North– NWTPC: high annual net revenues: plum

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Recession stimulus test – 3 criteria:1. Implement immediately

2. Value: number of jobs per dollar spent

3. Prepare us for the long-term future of expensive energy

Illustrate use of these criteria– Traditional: roads and bridges– New: energy efficiency upgrades for buildings

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CriteriaNew roads and

bridgesEnergy

efficiency

Implement immediately? Some delays Yes

Value: jobs per dollar?Far better than oil

and gasBetter than

both

Prepare for expensive energy future?

No (wrong way)

Yes


Criterion #2: ValueNumber of jobs per dollar

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Energy efficiency upgrades in buildings Insulation, weatherstripping, doors, windows, furnaces, etc. –

can start immediately Public buildings and public housing Private residences: subsidy

– NWT: $7-35 million – 80-385 person-years employment owner cost savings, energy conservation, reduced emissions,

green jobs, boost small business

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Spending – Long Term

Revenue capacity citizens’ priorities Helping the most vulnerable

– Progressive tax and income support system– A.k.a. “automatic stabilizers”

Cultural and language preservation programs Early childhood education:

– extend public system: $18m Quality public health care Sustainable transportation - transit where practical

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Documents

1. The Northwest Territories 2010-2011 Budget: An opportunity for Today and the Future Overview 1. Context: citizens’ priorities, recession, long term