(October 18, 2013) - Mr. Speaker, I want to take this opportunity to update Members on our fiscal situation and discuss some of the things we are looking forward to in the near-term.
Two years ago this Assembly created a plan to restore fiscal balance after years of stimulus spending and deficits, and to provide resources required to tackle our $3 billion infrastructure deficit. I am happy to report today that the plan is on track. We have constrained spending growth, reduced short-term borrowing, and achieved an increase in our borrowing limit. As a result we have kept our promise made in February’s budget to increase capital investment by $50 million in each of 2014-15 and 2015-16.
Our fiscal situation is basically unchanged from the 2013-14 Budget. However, the global economy remains fragile and its recovery from the recession is slow and uneven. Therefore we continue to closely monitor revenues and expenditures to ensure we achieve our fiscal targets. Our efforts to reallocate money to fund new initiatives and make all our programs more efficient and effective mean that we are on track to generate required surpluses in 2013-14 and for the remainder of this Assembly so that we may begin to address our infrastructure deficit.
Our main fiscal challenge continues to be to hold the line on expenditure growth so we can make infrastructure investments that can transform our economy by lowering costs for residents and businesses in remote communities and opening corridors to previously inaccessible markets and resources. Our medium-term economic growth will depend on transformational investments such as the Mackenzie Valley Fibre Optic Link and the Mackenzie Valley Highway.
Our ability to fund infrastructure investment is built on a foundation of fiscal sustainability outlined in our Fiscal Responsibility Policy. Using operating surpluses to help pay for infrastructure investment is instrumental in keeping debt levels sustainable and contributes significantly to our Aa1 credit rating. Fiscal sustainability also opens opportunities to take advantage of federal partnership in building infrastructure through the new Building Canada Plan expected to be announced in the next fiscal year.
Looking forward, April 1, 2014 marks the beginning of the last major transfer of responsibility to our government as we embark on new responsibilities managing the lands, waters, and resources of our territory. The Territorial Formula Financing Grant will increase by $67.3 million to help us fund these responsibilities. Work is underway to ensure those resources are allocated appropriately to allow us to maintain high standards of program delivery in these new areas of responsibility.
As well, beginning next year Northerners will for the first time benefit directly from resource revenues. We have included preliminary resource revenues forecasts in the fiscal framework, and continue to investigate the sensitivity around these forecasts. However, we will not receive the majority of the new resource revenues until 2015 because of the timing of royalty collections. The timing of resource revenues combined with their sensitivity to commodity prices mean that we have to be prudent in our fiscal planning to ensure we are not overcommitting a volatile revenue source.
Continuing the 17th Assembly’s commitment to seek Northerners’ opinions and consensus on how to build our collective future, the Department of Finance has launched discussions on fiscal priorities and management of resource revenues. This follows our budget dialogue sessions last year to seek Northerners’ views on how to achieve our goal of living within our means. Delivering on last year’s promise, we are reporting back on what we heard, what we have done with what we heard, and where we are headed. Last year’s budget made great strides investing in the priorities we heard, and we stay committed to incorporating Northerners’ views as we build next year’s budget.
Like last year, we are taking this year’s budget dialogue to the regions by visiting all of the regional centres, bringing in representatives from the other communities and inviting people to write in. We are also asking Northwest Territories residents to tell us what they think about our plan for a resource revenue legacy built on infrastructure investments; reducing the debt burden; and, permanent savings in the Heritage Fund, as well as our approximately $1.6 billion budget. We are asking Northerners how they see these investments being made. The approach to managing resource revenues we develop in the coming months will be determined by what we hear about the kind of future Northerners want for themselves, their children and grandchildren. I look forward to everyone’s participation in this very important conversation.
Devolution does not change the Government of the Northwest Territories’ fiscal strategy to generate surpluses to ensure infrastructure is financed responsibly and sustainably. While resource revenues provide added fiscal flexibility in infrastructure investment and debt management, they will not be used to fund operating expenditures. We will continue our emphasis on disciplined spending to ensure we remain fiscally sustainable.
Prudent planning in the early days of this Assembly has enabled us to protect programs and services while accumulating resources needed to begin to address our infrastructure deficit. At this, the halfway point of the 17th Legislative Assembly, we remain committed to this path of fiscal sustainability that ensures investments in today and tomorrow.
Thank you, Mr. Speaker.