Mr. Speaker, I would like to take this opportunity to update Members on our economy and to discuss some of the fiscal challenges that we will face as we work to deliver our Assembly’s shared priorities.

As we move towards the first Budget of this Assembly, we must be realistic in our expectations for how quickly we can make positive changes to strengthen our programs and services and deliver on our commitments to support the NWT economy.

The NWT economy has struggled to recover to a level comparable to where we were before the serious global financial and economic recession over a decade ago. Since 2014, our economy has stabilized but remains stagnant with real GDP growth under one per cent per year which is less than half the economic growth rate for the rest of Canada. Without the construction of the Gahcho Kué diamond mine during that time, the NWT economy would have shrunk.

We expect the final data to show that in 2019 the economy was largely supported by public sector investment. While Norman Wells is producing oil again after the pipeline was repaired in September 2018, mineral exploration for 2019 is expected to be lower than 2018 delaying the discovery and development of the next generation of NWT mines.

Looking forward, our economic outlook is one of tepid growth as diamond production has passed its peak with weaker overall exploration investment in the mining sector. As it currently stands, none of the existing diamond mines have confirmed plans for production past 2034, and the Diavik mine is scheduled to close in 2025. We remain optimistic about several smaller resource projects, but there are no projects in the immediate future that would completely offset the loss of activity once the diamond mines close, and the timelines for bringing these other projects online   may be years after the diamond mines cease to operate.

We all know that the resource sector is a key driver in our economy, and this House knows that the industry is faced with challenges. That is why Members have made increasing resource exploration and development one of our priorities. Low commodity prices and global trade fluctuations have introduced a high degree of uncertainty for any long term investments in the NWT resource sector. This risk, coupled with the production costs in the north, impacts the decision making of our local businesses, especially those who depend on the mining sector for much of their business. Global market conditions will continue to present difficulties for the next few years and could have long term economic implications.

The stagnant economic outlook means that we are starting the 19^th Legislative Assembly largely in the same position as the start of the last Assembly. For the current fiscal year we are projecting an $80 million revenue decline from the 2019-20 budget. This revenue decline has increased our short term borrowing and slow economic growth means that our total revenue growth is expected to be a modest 3.5 per cent over the next five years. As a result of this year’s revenue decline, current levels of spending will bring us closer to  our federally-imposed borrowing limit next year, leaving only a small fiscal cushion to weather any further shocks to revenues or expenditures. 

Knowing where we stand, the real question becomes what will we do about it?

The best way to improve the GNWT’s bottom line Mr. Speaker, is to support our residents and businesses to build a more robust and diverse economy that can better weather the fluctuations we have seen with our resource sector. As a government we can provide this support by better defining what we need to provide as part of regular programs and services so that there are fiscal resources available to invest back into our territory.

Put more simply, we need to work together to make decisions that will restore sustainability to our finances. We need to remember that slower economic activity leads to slower overall revenue growth at the same time as pressure for government programs and services increases. In good economic times, the demand for social programs slows. During a downturn, our fiscal resources are squeezed to address the growing expenditure pressures and challenges our ability to invest in our longer term future.

Mr. Speaker, Cabinet will be developing a fiscal strategy over the next couple of months that will help us balance our wish to invest in the territory and its people, while ensuring the programs and services our government provides are sustainable. While we are already under pre-existing timelines to consider the Main Estimates for the 2020-21 fiscal year early in the New Year, Cabinet does value the insight and input of Regular Members in the GNWT’s budgeting and planning process.

Our first budget will strive to be a collective effort to be accountable and efficient as we pursue our priorities and mandate. We look forward to reviewing the 2020-21 Main Estimates with Standing Committees in the New Year and to discussing them publicly during the upcoming budget session. In addition to this process, Members will also have an opportunity to help us develop and vote on Supplementary Appropriations in March that will provide new funding for initiatives linked to our shared priorities.

Looking longer term into 2020, we also intend to engage with Members on the development of four-year business plans. Unlike the previous annual business plans, these four-year plans will help define the long-term agenda for departments, and Member input will be crucial to shaping the government’s direction and actions for the next four years.

It is through these efforts that we will meet our fiscal reality and chart a path forward in the best interest of the people we serve.                                                                                                  

I look forward to working with all Members of the 19^th Assembly to find creative and effective solutions to the challenges we face, and to taking the steps we need to support an economy that will support our residents. 

Thank you, Mr. Speaker.