Thank you, Mr. Speaker. I want to take this opportunity to update the Members on our fiscal situation.

I tabled the first budget of the 17th Legislative

Assembly in May, just five short months ago. Our commitment to protect programs and services has not changed, and our strategy of limiting new expenditure growth to ensure surpluses has become even more important as global economic instability persists.

While our economy is recovering slowly from the global slowdown, we remain vulnerable to uncertain economic conditions. Statistics Canada’s latest estimate shows a 2 percent decline in the NWT population from 2011 and reinforces our concerns about how our economy is doing and future revenues. Beginning in 2013-14, the five-year annual average territorial formula financing growth forecast is 1.7 percent. That’s compared to the 6.3 percent average annual growth over the last five years. We must remain committed to our path of fiscal sustainability by curtailing expenditure growth because revenues are not expected to grow as quickly as in the past.

There is good news, however. As you will see in the interim public accounts that will be tabled in the House later today, the government has a small surplus of $1.3 million for 2011-12. That’s our first surplus since 2007 and it’s a significant improvement from the previous year’s $23 million deficit. This demonstrates that we are getting our fiscal house in order, which will help us achieve our goal of increasing our infrastructure spending in the last two years of this Assembly.

Turning to this fiscal year, we are still projecting a moderate operating surplus of $69 million, but we have already had some unexpected costs. We had a severe fire suppression season. We had to implement an emergency anthrax response, and the costs of the Nahanni flood are not yet accounted for. We will have to be resolute in our commitment to fiscal restraint to ensure we generate another surplus this year.

These surpluses are crucial to our long-term debt management and infrastructure investment plans. As you all know, we have returned to a conservative capital investment plan in order to adhere to our Fiscal Responsibility Policy. We need operating surpluses to fund at least 50 percent of our capital expenditures. Without these surpluses we will not be able to increase our infrastructure investments by 2014. For that reason, the fiscal strategy to limit annual expenditure growth confirmed in this year’s budget remains unchanged.

We are targeting April 1, 2014, as the implementation date for devolution, when decisions about the management of NWT lands, water and non-renewable resources are finally the responsibility of our own residents. This includes management of the NWT share of resource revenues.

This Assembly recognizes that these revenues must be managed responsibly. Responsible management means not using resource revenues to fund day-to-day operations. It means investments and savings that convert non-renewable resource wealth into other assets to benefit both current and future generations.

This new revenue source is very volatile and fluctuates with the boom-bust cycle. We need to ensure stability and sustainability of our revenues. This is a high priority for our government and we are investigating the possibility of creating a Revenue Stabilization Fund.

We need to maintain tight control over our operating expenditures. We are challenged to manage the growth at 2 percent. That’s about $30 million annually. As you know, the Department of Finance is engaging residents in a conversation about the budget, to ensure that their priorities are reflected in our response to the challenge.

The budget dialogue process began in September and has brought budget discussions to the regions for the first time. In just four short weeks, I have met with over 80 residents in Inuvik, Norman Wells, Fort Simpson, Fort Smith and Hay River. I appreciate the time and effort NWT residents have taken to participate in the sessions or send written submissions.

Some common themes are emerging. First, residents appreciated hearing about the GNWT’s fiscal reality following four years of stimulus spending. They told us we need to allocate more resources to prevention, particularly in the period from conception to four years old. We need to remove red tape, duplication and program overlap. They want our government to be as supportive of sustainable development as it can. They also want us to address our infrastructure deficit.

I look forward to concluding the final budget dialogues in Yellowknife on October 23rd and

Behchoko on October 24th . I commit to report back

to residents next month.

Mr. Speaker, we are on the right fiscal track. With the support of our residents and this Assembly, we will remain fiscally sustainable and yet still have the funds to invest in individuals, families and communities. Our investment will pay off by helping them grasp the opportunities to share in the benefits and responsibilities of a unified, environmentally sustainable and prosperous Northwest Territories. Thank you.