The Northwest Territories has asked the Government of Canada to look again at a cut to the federal transfer payments the territory receives.
The payments are an annual transfer from Ottawa to each territory, partly based on population size, to help provide for public services.
In the current fiscal year, the NWT will receive $1.29 billion in support from the federal government. However, this is set to drop by $34 million to $1.256 billion in 2016-17 – a decrease officials say neither the territory, nor Ottawa, expected to happen.
“The announced reduction is due to methodological changes to the way Statistics Canada prepares provincial/local government expenditure data, which has produced the unintended consequence of permanently lowering each territory’s Gross Expenditure Base over two percent from what was previously expected,” said a territorial government statement issued on Tuesday.
“The fiscal impact of the technical changes was not anticipated by the territories or the Government of Canada.”
It’s not clear how that impact was overlooked by both governments. Funding for all three territories is affected, but the Northwest Territories suffers the worst hit.
Background: Federal support for the Northwest Territories since 2007
At a meeting earlier this week, the territories asked federal finance minister Bill Morneau to examine whether lost funding can be restored.
“Stable and predictable funding is essential to ongoing fiscal planning and the delivery of comparable programs and services to northerners,” said NWT Premier Bob McLeod in a statement.
“Minister Morneau committed to addressing territorial concerns prior to March 15, 2016. I thank him for his attention to this matter and his government’s commitment to working directly with the territories on issues of concern to us.”
The drop in funding would represent a cut of approximately $968 per Northwest Territories resident.
Between 2007 and 2015, federal funding per resident increased from $20,360 to a high of $29,319.
Yukon is set to receive $24,333 per resident, a drop of $378 per head. In Nunavut the 2016-17 figure is $40,364, a per-capita drop of $457.
Around two thirds of the NWT’s annual revenue comes from federal support, the bulk of which takes the form of transfer payments.
The territory’s highly publicized drive to increase its population by 2,000 is in large part motivated by the extra $60 million it would duly receive in transfers each year.
