The Government of the Northwest Territories will freeze the salaries of some high-earning staff as a response to the harsher economic climate.
Finance minister Robert C McLeod made the announcement in the legislature on Friday morning.
The salary freeze affects deputy ministers, senior managers and excluded employees and will be in place for two years, beginning in 2016-17. McLeod said the NWT had “started doing its part” to reduce expenditures by introducing the freeze.
When figures were made available in 2012, deputy ministers could expect to earn an annual salary of between $162,000 and $248,000 in the NWT.
A level lower, senior managers earned between $101,000 and $205,000.
At the time, only one of 204 senior management staff at the GNWT earned less than $100,000. Eighteen earned more than $200,000. In 2011-12, senior management salaries cost the territory $35,824,556 in all.
In Friday’s statement, the finance minister also rejected recent calls for higher taxes as a possible source of revenue.
“Quite simply, our tax base is too small to make increasing taxes the answer to our declining revenue problem. If we increase the tax burden on businesses and individuals we risk damaging the economy further,” said McLeod.
“Increasing taxes will take money out of the local economy, which affects family pocketbooks and the bottom line of local businesses. It also reduces the attractiveness of the NWT as a place to do business, live and work.”
Instead, McLeod promised a forthcoming paper on possible options to increase revenues – but said there would be “no new information” in that document, as no fresh alternatives have been found.
The finance minister’s statement included a warning that the territorial government must cut back on expenditures urgently.
“We are no longer in a position where we can keep expenditures at their current rate and hope to keep expenditure growth in line with revenue growth to maintain fiscal sustainability,” he said.
“Revenues are declining and we need to reduce the level of expenditures as well as restrain their growth.”
McLeod stressed that infrastructure would remain a priority, adding that “reducing and delaying infrastructure investments is not an option” as the territory must promote economic growth and maintain its schools, hospitals and community facilities.
Instead, McLeod suggested the government will closely examine the programs and services it offers – paying only for “programs and services that meet our priorities and are affordable over the long-term”.
He did not elaborate on examples of programs and services that may be under threat.