Thank you, Mr. Speaker. Mr. Speaker, as my term in office winds to a close I feel that it is incumbent upon me, as the Finance Minister, to provide the Members of this Assembly and members of the public with an overview of the fiscal status of this government as we reach division, and to offer some words of advice, if you will, for the future.
Mr. Speaker, the good news is that, with prudent fiscal management, this government has balanced the budget, and will wind up with an accumulated surplus at the end of 1998-99 of about $58 million.
However, while our expenditures are going to increase over the next few years, this will not be matched by growth in our revenues. This means we are facing some immediate deficits that will quickly eat up the surplus we have managed to accumulate.
If we do not do something about this, and do it very soon, the consequences of our inaction will be significant. Thankfully, there are steps we can take to address the problem. However, to have any measure of success, we will need to encourage an understanding of the problem and garner support for our proposed actions both within the NWT and at the national level.
The fiscal problems we see on the horizon have not been unexpected, they are just hitting us much sooner than anticipated. When we negotiated the new formula financing agreements we were able to get all of the money we needed to administratively run two territories. We negotiated improvements to the way the formula caps work and a federal commitment to look at a larger tax window for the territory. However, getting more money for programs will require some additional creativity, as it was not on the agenda during the formula discussions. And so, we are now being dramatically affected in the west by our restricted population growth in relation to the Canadian average. Declining or very low population growth is resulting in virtually no revenue growth over the next few years.
As I have already pointed out, Mr. Speaker, the problem arises not because population and revenue growth is flat, but because, at the same time, expenditures are on the rise. The bottom line is that our residents need more services and support in almost all areas. This translates into more spending in education, health care, housing, and economic development.
Naturally, spending reallocations are an option to meet these needs, but over the past few years we have cut current spending to the bone. There is simply no political appetite left for any further spending cuts. To add to our dilemma, we also need to make strategic investments in many areas to prevent even higher cost increases in the future. Where can we get this money to invest? Mr. Speaker, the answer if simple. We must increase our revenues and we must increase them substantially. There is no alternative. We have a narrow window of opportunity to do just that. Earlier I said that during the formula financing negotiations, the federal Finance Minister had indicated a willingness to look at a larger tax window and a restructuring of our financial arrangements with Canada. Following up on that commitment, we have made these revenue-generating objectives a major part of the new Western Agenda, and we have started the process of building support locally and federally for this change.
But turning this opportunity into reality is not going to be easy. We have to stop fighting over a diminishing pie and start looking at ways to cooperate to make the pie larger. We must move quickly, we must build wide northern support, and we must convince the federal government that not only is this essential and in their interests but that it can be done without negatively affecting federal fiscal objectives. If we fail to take advantage of this opportunity because of narrow, parochial self-interest, we will all be losers and so will our children.
Mr. Speaker, just yesterday the Premier and myself met with the Minister of Finance, the Honourable Paul Martin, and the Minister of DIAND, the Honourable Jane Stewart. I am pleased to report to the House today that we are each in agreement to move forward in an orderly way to pursue the possibility of a tax window. We have also been busy trying to build northern understanding and support for the proposal largely through the Premier's meetings on the Western Agenda. At the end of the day, I think we can make this happen, but only if all northern groups are pulling in the same direction.
Mr. Speaker, although being Finance Minister can, on occasion, present complex and difficult challenges, there are only a few basic ways of finding the financial resources to meet the needs of our constituents: either we increase taxes, which is not a viable option in this constituency; we cut spending, which we have done; or we find new sources of revenue. I would urge this Assembly, and in particular the next Finance Minister, to heed this advice. We must move quickly to take advantage of the unique opportunity that has presented itself, in the form of federal willingness to listen to our case, so that we may find the means to increase our revenues now and prevent a looming fiscal crisis. Thank you, Mr. Speaker.