Mr. Speaker, I would like to take this opportunity to update Members and Northwest Territories residents on this government's fiscal position and outlook.
When I presented the budget in February, we were looking at a fairly positive short-term fiscal situation. Primarily because of a very large one-time corporate tax filing we had forecast a 2001-2002 year-end surplus of about $160 million and a deficit of about $12 million for the 2002-2003 fiscal year. Based on final public accounts for last year we realized a surplus of $120 million, not $160 million, for the last fiscal year. However, the largest change is in our current revenue and expenditure forecasts for 2002-2003 which suggest we are heading for a $104 million deficit for 2002-2003.
The decline in our short-term outlook can be attributed to several factors, primarily on the revenue side. Lower than expected population growth, as measured by Statistics Canada, and higher than expected provincial-local government tax effort have reduced our expected grant from Canada both for the 2002-2003 fiscal year and for prior years.
The resulting large prior year adjustments will affect our grant payments for this year. Although we are confident that our population figures will be corrected by the time the census adjustments are announced next year we must reflect the current official numbers in our revenue estimates. In addition, lower corporate income taxes and slightly higher expenditure projections have added to the forecast deficit.
Looking forward beyond the 2002-2003 fiscal year we continue to see revenue forecasts that are below our spending needs, although there has been a small improvement since the February budget forecast. Overall, however, our fiscal position for the four years from 2001-2002 to 2004-2005 has worsened by about $75 million from the budget projection.
In the February budget I explained that, unless we receive further one-time tax revenues, or increased federal investment, we would likely reach our government's borrowing limit of $300 million by late 2004-2005. Based on our current forecast of cash requirements, we estimate that this date will remain roughly the same. To avoid this we have only a few basic choices. Increase revenues and/or cut spending.
The original fiscal strategy laid out in the budget was based on three key assumptions:
- • Economic development will continue;
- • Northern governments will achieve devolution; and
- • Northerners will benefit from resource development.
Based on these assumptions, we have maintained a strategy of making key investments to ensure Northerners benefit from development.
Mr. Speaker, although there has been some recent slowing in economic activity -- oil and gas exploration may be down from last winter's levels and the completion of the Snap Lake diamond mine is now estimated to be delayed by a year, the fundamentals of our economy are unchanged. The prospects for our resources remain extremely bright. We are still seeing high rates of employment, the highest in Canada, in fact. The first eight months of 2002 saw retail trade figures 14.5 percent higher than the same period last year, and wholesale trade 48 percent higher. The Diavik diamond mine will begin shipping diamonds in February 2003. The Mackenzie Valley Producers Group is ready to file their preliminary information package.
What is missing from this equation is the federal government. The federal response to the opportunities of the Northwest Territories has been disappointing. Despite being told that our proposal for the Strategic Infrastructure Fund, Corridors for Canada, was the best submitted, we have been told by federal Infrastructure Minister, the Honourable Allan Rock, that the Northwest Territories allocation from the Strategic Infrastructure Fund will only be $20 million, the same as the other two territories.
We are frustrated that devolution negotiations, which seemed to be finally getting off the ground, are now being held up by the fact that the federal negotiator does not have a mandate to discuss the fiscal issues.
We are concerned that benefits to Northerners may be at risk as a result of federal inattention to the pipeline file. however, we are encouraged by the appointment last week of a federal representative, Mr. Roland Priddle, whose job it will be to help advance this project.
I met with the federal Finance Minister, the Honourable John Manley, several weeks ago, to raise a number of these issues. It was a productive meeting, and I am seeking a further meeting to follow up on our discussions. I am hopeful that Mr. Manley will be able to address some of our fiscal concerns, especially in light of the positive fiscal outlook Mr. Manley outlined for Canadians yesterday. I am also seeking a meeting with Mr. Rock to explain why his offer will not meet the Northwest Territories' objectives for infrastructure investment.
Although we must continue to aggressively pursue federal investment, we are also looking for ways we can reduce our spending and increase our revenues. We must not, however, jeopardize our long-term social and economic objectives. I will of course expand on this in much more detail in the February 2003 budget.
The potential wealth that will be created from the development of the Northwest Territories' vast resources and the fiscal return that that development will generate are huge. I still believe that our long-term strategy of making investments to prepare for and manage that development so that Northerners reap the maximum benefits is the right one. Thank you, Mr. Speaker.
-- Applause