Thank you, Madam Chair. The vision adopted by the Assembly last May begins with the word self-reliant. The vision that leads off the Northern Strategy framework uses this phrase in its first sentence. Self-reliance means that we look to ourselves first to tackle our challenges and to improve our lives and our communities. If the NWT is truly to achieve our vision of self-reliance for individuals, families, communities and as a territory, we need the right tools and we need the resources.
There is much work to be done. With adequate financial resources, our job will be made easier and our chances of success enhanced. Governments in the NWT, territorial and aboriginal, need to ensure that fiscal arrangements meet the needs of our residents. These arrangements must provide adequate funding. They must include appropriate incentives to encourage economic development and growth. They must allow the territorial and aboriginal governments to work together to effectively and efficiently provide programs and services to the people of the NWT.
The Northern Strategy framework sets as a goal the strengthening of governments and institutions, in order to provide northerners with effective governance and greater control over decisions central to our future.
If this is to be achieved, the strategy must address the need for a fair resource revenue sharing agreement between Canada and the NWT governments. It must include adequate and responsive funding under both formula financing and aboriginal self-government financing arrangements. As a territory, we rely on the federal government for about 70 percent of our revenues. This large percentage recognizes that the cost of providing public services in the North is very high compared to the capacity of the NWT's 42,000 residents to finance those services.
In 2005-06, NWT residents and businesses will contribute over $240 million in territorial taxes and other own-source revenues. Furthermore, on average, for every dollar of expenditure made by the federal government in the NWT, more than 50 cents of federal revenue, or almost $500 million per year, is generated in the NWT for the federal government in the form of taxes and other payments. It is estimated that, between the diamond mines and the Mackenzie Valley pipeline, government revenues from resource development over the next 20 years will approach $20 billion. However, the federal government currently receives virtually 100 percent of royalties from resource activities in the NWT.
Although the GNWT does receive some tax revenue from development, under recent arrangements, much of this tax revenue is clawed back through a lower grant from Canada. Until we negotiate new arrangements with the federal government, Canada will continue to receive more than 90 percent of the total royalty and tax revenues from non-renewable resource development.
This is not sustainable. Given that it is northern governments, the GNWT and aboriginal self-governments will bear the brunt of the expenditure impacts created by development. It is northern governments that will face expenditure demands for job training, for counselling and for addition programs, for policing, for infrastructure repair and upgrading, and for environmental protection, to name just a few. We must ensure the that NWT governments have the fiscal resources to provide our residents with levels of public services comparable to those anywhere else in Canada.
The federal government has recognized that recent agreements with the governments of both Newfoundland and Labrador and Nova Scotia are a step towards self-reliance for those provinces. Clearly the negotiation of a resource revenue sharing agreement that ensures that northern governments receive a fair share of resource revenues is a critical requirement for continued development in the NWT. A major component of the Northern Strategy is the federal commitment that the conclusion of a devolution and revenue sharing agreement is a priority and that we will see significant progress in the negotiations by this spring.
Last October the federal government announced significant changes to our formula financing arrangement. The previously separate although similar arrangements between the federal government and the NWT, Nunavut and the Yukon have now been amalgamated. There will now be a fixed amount of funding for formula financing for all three territories: $1.9 billion for 2004-05; $2 billion in 2005-06; and, after that, the funding will grow at a rate of 3.5 percent a year. Canada will establish an expert panel to provide recommendations on the allocation of these fixed amounts among the three territories. These recommendations are expected before the end of 2005.
It is critical that new arrangements respect the fundamental principles that have guided formula financing since it was first implemented 20 years ago. They must ensure that each territorial government has adequate funding to provide public services in a high-cost environment. Arrangements must recognize that the territories provide programs and services to small populations in remote locations, often with health and social indicators well below national averages, with limited infrastructure and in the harshest climate in Canada.
New arrangements must also be responsive to changing circumstances within the territories. Territorial governments must be able to respond to changes in program and service needs brought about by population change, or economic changes affecting their jurisdictions. Arrangements must provide the territorial governments with the incentives to become as fiscally independent as possible. The territories should be encouraged to develop their economies and growing their tax bases and excessive clawbacks should be removed.
Finally, the new arrangements must not pit the territories against each other in order to meet our fiscal needs. The expert panel is tasked with making recommendations on territorial financing, and its work must reflect the vision articulated in the Northern Strategy framework; strong, responsive government working together to build a prosperous and vibrant future. This vision, however, does not apply only to territorial governments nor to the GNWT in particular. In the future, the GNWT will not be the only government in this territory delivering government services.
Aboriginal governments, as they conclude self-government agreements and draw down their jurisdictions, will assume some of these responsibilities for their citizens. Aboriginal governments must have the capacity to be self-governing. The establishment of aboriginal self-governments will lead to additional costs to run new self-government institutions and to build capacity in those institutions.
The GNWT, given its limited fiscal capacity, cannot fund incremental costs without reducing funding available for other programs and services. It is incumbent on the federal government to fully fund these incremental costs. Fiscal agreements on funding arrangements, including tax sharing, will need to be negotiated between each aboriginal government, the federal government and the GNWT. The primary objective of these arrangements should be to ensure that aboriginal governments have adequate funding over the long term to deliver programs and to run their government structures.
Fiscal arrangements between aboriginal governments, the GNWT and Canada must be structured so that all governments can operate effectively and efficiently. The arrangement must be workable, sustainable and consistent. They must adhere to the same principles that we expect in our formula financing arrangements with Canada. They must be adequate, sustainable and responsive.
The GNWT and the Aboriginal Summit have had very successful discussions over the years on how self-government fiscal arrangements could look and how they could be integrated into formula financing, resource revenue sharing and tax sharing. These discussions would even be more productive if the federal government were to participate as well. The Northwest Territories wants to be more self-reliant and, to accomplish this, we must have the right tools. Thank you, Madam Chairperson.