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GN eats up last of its surplus in pre-election budget

Spending growth outstrips revenues

JIM BELL

With his feet shod in a borrowed pair of sealskin kamiks to symbolize the government’s commitment to future frugality, Finance Minister Kelvin Ng warned MLAs this week that tight financial times lie ahead for the Government of Nunavut.

"We have no accumulated reserves to invest," Ng said in his budget speech on Tuesday, where he set out the GN’s program spending plans for the 2003-04 fiscal year.

Ng said that, by March 31, 2004, the government will eat up almost all of its hefty accumulated surpluses.

Those surpluses, mostly made up of unspent salary money from the GN’s early low-staff years, will help cover an $82-million operating deficit incurred last fiscal year and an $11.6-million deficit it will incur in the upcoming fiscal year.

The GN will have no trouble paying its bills between now and March 2004 — Ng is even projecting a small surplus of $2.7 million by then.

But in the future, there will be no more surplus cash to help pay for the kinds of things the GN spent heavily on over the past two years — capital projects like new schools and health centres.

The GN’s capital budget — the portion set aside for buildings, vehicles and other physical things, now stands at $143.1 million for 2003-04, more than double what it was in the territory’s early years.

"[T]his level of growth in expenditures is not sustainable without securing additional revenue sources," Ng told MLAs.

But he denied that this year’s budget, the last before the next territorial election, simply moves painful financial decisions onto the shoulders of the next government.

"Over the first couple of years we accumulated a significant surplus as a result of not being fully staffed-up, and not fully delivering all our programs. And we have wisely, we think, strategically invested some of those accumulated surpluses. So we haven’t acquired any significant debt that we’re passing on to a new legislature," Ng said.

Ng pointed out that the government’s biggest spending leaps recently have not been in programs, but in one-time capital projects — the easiest things to cut back on in the future.

"We haven’t created ongoing operating and maintenance liabilities by expanding program areas in a big way. So that will obviously be the first area of reduction — in the capital spending of the government," he told reporters.

That, however, doesn’t rule out actual program cuts in the future. If needed, those cuts would be guided by information produced by the government’s "program review" exercise.

The government has just finished compiling an inventory of all its programs and how much they cost. The next step will be for the department of the executive and intergovernmental affairs to study that list to see what works and what doesn’t.

"If we can’t find some efficiencies and economies of scale in our program review exercise, then there may be some tough decisions made in our program areas. We hate to get to that point, but we can’t operate on the resources that we have now," Ng said.

But he said that what the GN really needs are new sources of revenue.

"We really need the federal government to come to the table in a lot of areas: economic development agreement, devolution, infrastructure support, health care etc., which has been on the agenda, really, since we became a government," Ng told reporters.

Since the health-care deal worked out last month between the three territorial premiers and Prime Minister Jean Chrétien isn’t final yet, any new health money that would flow from it isn’t recorded in the documents Ng tabled this week.

He said that when that deal is final, the new revenues will be reported to the assembly in a fiscal update, which he’s likely to make in the fall.

Ng told MLAs that the territorial government will spend $843 million in 2003-04, but receive only $804.5 million in revenues.

But after adding and subtracting all the various deficits, surpluses and projected lapses in spending, he expects the government to come out at the end of the year with a $2.7 million surplus.

One out of every four GN dollars, or $207.3 million, will go toward the department of health and social services this year.

Of that, $55.8 million has been set aside for capital projects, including three new regional health facilities, and $151.6 million for programs.

Education is the next largest department, with total spending of $183.9 million projected for 2003-04. Of that, $23.9 million is for capital programs and about $160 million is for programs.

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