Thank you, Mr. Speaker. I would like to provide an update on the government's fiscal situation.
The budget I presented in this House in March laid out a fiscal plan that would allow us to achieve the goals of NWT residents while achieving fiscal sustainability. The budget did not make dramatic changes. We wanted an opportunity to consult with northerners before finalizing our plans for the term of the 15th Assembly. As Premier Handley noted in his sessional statement yesterday, this House has consulted with NWT residents to help us set an overall vision and goals for the government and people of the Northwest Territories. Our vision focuses on self-reliance and shared responsibility.
However, we need to be able to reconcile our goals with our fiscal resources. One of the priorities of the budget was establishing fiscal sustainability. This involved a combination of revenue increases, expenditure reallocations, and achieving a better fiscal deal from Canada. Without these, the GNWT will not have the resources to support our most important goals and priorities. Achieving long-term fiscal sustainability is vital to achieving our vision.
The public accounts for the 2003-04 fiscal year, which I tabled yesterday, show an operating deficit of $65 million, $13 million less than was projected in the March budget.
Mr. Speaker, we are now halfway through the current fiscal year and I am pleased to report that we are on track to meet our fiscal targets.
First, the Legislative Assembly approved three revenue initiatives earlier this year. These will generate an estimated $10 million in 2004-05.
Second, the 2004-05 budget included $15 million in expenditure reallocations and identified the need for a further $40 million in spending reallocations in future years. These reallocations will be a source of funding for priority programs and forced growth.
Third, we believe we have made significant progress in our funding arrangements with Canada.
As the Premier has noted, last month's First Ministers' meeting on health care was a very positive one from the North's perspective. We received good news with respect to funding, both for specific health care and under our formula financing arrangements. On the health side, the GNWT will have about $10 million a year extra to improve access and to help with our high medical travel costs. On the formula financing side, there is a strong indication that we may receive some of the financial relief that we have sought for so long from the federal government. The federal government has put proposals on the table for both the federal/provincial equalization program and for federal/territorial formula financing. The formula proposal means additional funding for the territories, but it also involves some significant changes to the way our funding has been determined for the last 20 years.
The Premier will be meeting with his territorial colleagues and the Prime Minister later this month to discuss how the federal proposal will work and what exactly it means to us in new funding.
In addition, what our formula will look like after 2005-2006 may largely depend on the results of the work of an independent commission, the details of which will not be discussed until the next First Ministers' meeting on October 26th. As a result, we need to be cautious when we forecast our long-term fiscal situation. This uncertainty means that we cannot become complacent or lose our focus on fiscal responsibility.
Once we have a clear picture of our fiscal position, we can decide how to best use our resources. A key priority should be financing our capital investments. Over the last few years, our fiscal situation has limited what we could afford to invest in capital infrastructure and this has resulted in a significant shortfall and must be addressed. To do this, it is not enough just to balance the government's operating budget. We must generate an operating surplus to provide the cash to at least partially finance our capital investments.
The government also has to make a large $300 million cash payment to the federal government in 2006-07 to reimburse Canada for an overpayment on our corporate income tax entitlements in 2002. This repayment must be provided for in our cash planning.
For these reasons, we must be cautious in how we proceed in our fiscal planning for the next few years. As decision-makers, we owe it to the residents of the Northwest Territories to ensure that government is operating efficiently and that our programs are achieving acceptable results for the money we are spending on them. We intend to continue with the budget plan to identify areas for redirecting our spending from lower to higher-priority areas. The measures required to achieve this have been developed through a rigorous planning and prioritization process and we see no reason to alter them at this time.
To conclude, Mr. Speaker, the fiscal position of the Government of the Northwest Territories is brighter than the picture I described last March.
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We have made substantive progress on the revenue side, both with own-source revenues and transfers, and we have also made progress on the expenditure side. By the time the 2005-06 budget is presented next February, I will provide a more detailed fiscal picture, one that shows how we can achieve our vision and long-term fiscal sustainability. Thank you, Mr. Speaker.
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