Mr. Speaker, I would like to turn to our longer-term fiscal outlook. We have been very fortunate over the past two years in that revenue increases have provided us with significant operating surpluses and made it unnecessary for us to borrow.

These revenue increases have allowed us to make some important investments and meet many needs that we would otherwise have been unable to address without significant federal cost sharing. However, they have not changed the longer-term picture. In the long-term, our revenues will not likely be sufficient to maintain current expenditures and investments unless some fundamental changes occur. Consequently, Mr. Speaker, while we will invest a portion of these one-time revenue increases in economic and social initiatives, we must set aside a portion to finance projected future deficits.

In fact, without the benefit of one-time revenues or increased federal investment, revenues in 2003-2004 could be $67 million less than in 2002-2003. This would result in a $118 million operating deficit in 2003-2004, falling to $78 million the following year. If this occurs, these deficits will bring government borrowing close to our authorized limit of $300 million by late 2004-2005.

Fiscal forecasting is challenging and difficult in the best of times. While there is relative optimism, there is some uncertainty about the Canadian economy and how it will affect our revenue forecasts. The GNWT depends on the formula financing grant for much of its income. Future growth in the grant depends in part on growth in provincial government spending and on the state of the Canadian economy. It also depends on our own economic performance and the growth in the Northwest Territories' population. Finally, we expect that resource development will begin to generate significant revenues in the next few years, which will not accrue to northern governments until devolution occurs. These circumstances make fiscal planning over the medium-term a challenge for this government.