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October 30, 1998

One of the last milestones along the road to Nunavut: a team led by NWT Finance Minister John Todd negotiates a formula financing agreement with federal Finance Minister Paul Martin.

Paul Martin, Jack Anawak sign final Nunavut funding deal

ANNETTE BOURGEOIS
Nunatsiaq News

IQALUIT — Federal Finance Minister Paul Martin said a new formula financing agreement for the Nunavut government takes into consideration the inability of the new territory to raise much of its own revenue.

"We recognize at the beginning, certainly in the initial stages, that Nunavut's revenues will be lower than, for instance, other jurisdictions," Martin said shortly after signing the new agreement in Iqaluit last Friday. "The inital provision of funding took that into account, so we set a scale of revenue that will take that into account."

It's been estimated that Nunavut will be able to raise only about 5 per cent of its own revenue, with Ottawa supplying the other 95 per cent.

The agreement determines how much money the Canadian government will transfer to the Nunavut territorial government after April 1, 1999 for the delivery of programs and services.

The agreement, Martin said, includes provisions that recognize Nunavut's rapid population growth and it's limited ability to raise its own revenue, as well as any downturn in its own revenue. The agreement also gives Nunavut legislators the flexibility to set their own spending priorities.

Martin promised his government is committed to providing predictable and stable funding for Nunavut.

"This means the new government will have sufficient funding to run programs in the years ahead," he said.

He also denounced critics who say spending hundreds of millions of dollars on such a small population is fiscally unsound.

"This is a very fiscally responsible thing," Martin said. "It's giving people the tools to take control of their own governance and their own destiny. By far, the best government is not going to be done in the shadow of Parliament in Ottawa. It's going to be done here on the front lines where the problems and opportunities lie. That's the most responsible way to have government."

Interim Commissioner Jack Anawak, who signed the agreement on behalf of the Nunavut government, praised NWT Finance Minister John Todd, who suffered "great personal loss to ensure Nunavut would be debt free on April 1."

The new formula financing agreement was calculated based on historical funding requirements using GNWT expenditures on programs and capital during 1996-97.

Using 1996-97 GNWT spending levels, officials used a "base expenditure" figure of $587 million as a starting point.

In a speech last July, NWT Finance Minister John Todd estimated that the Nunavut government would have revenues of $626 million in 1999-2001.

Additional administrative costs were estimated based on Nunavut's decentralized model of government.

"The agreement we sign today establishes a solid financial foundation for Nunavut to build on," Anawak said. "We are looking forward to taking back the control of our destiny and assuming responsibility for our future. We now have the opportunity to do things differently."

The agreement also allows for renegotiation after the first two years and an additional three-year renewal option.

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