Well dressed beggar was the title of Jim Bell's editorial in Friday's Nunatsiaq News.
Jim, I think, was showing frustration with the GN (Government of Nunavut) and its seeming lack of urgency with a looming potential financial disaster which will start with the first sighting of a tanker or barge in any of the 25 (or is it 26?)* communities of the Territory of Nunavut.
"The Government of Nunavut's biggest financial issue right now is the soaring price of oil.
Naturally, the Government of Nunavut has no plan to cope with it.
"We don't have a plan yet, but we are working on it...," Louis Tapardjuk, the finance minister, said this past May 22, many, many months after global fuel prices began to skyrocket towards their current levels.
At the same time, Tapardjuk and other government officials said they expect the cost of this summer's fuel supply will blow an $85-million hole in the GN's current budget. As each day goes by, that number gets bigger. Earlier this week, Ed Picco, the energy minister, gave Canadian Press a figure of $100 million.
If these figures turn out to be even remotely accurate, they'll produce a whopping deficit for the GN by the end of this fiscal year.
MLAs are supposed to act as watchdogs over government spending. But when the GN presented them with its 2007-08 (sic - 2008-09) budget this past February, MLAs never got a chance to examine and debate the government's biggest financial issue.
Nunatsiaq News
June 20, 2008
Jim is slightly wrong in the above last paragraph. He mistyped the fiscal year - clearly angry - also MLAs did during, the committee of the whole examination of departmental main estimates for 2008-09 (what actually seems to substitute for debate in a "consensus government") questioned those in charge of the Petroleum Products Division** (PPD) and the Minister responsible about some aspects of fuel for Nunavut (see March 11th Nunavut Hansard).
And, after the befuddled reply of May 22nd mentioned by Bell, there were more and more questions in the Leg, all, I think from Hunter Tootoo about the situation. But, as per usual, there were no real answers and, also, as per usual, a demonstration on the part of cabinet ministers, to whom the questions were asked, that they likely didn't even understand the question least of all the responsibilities their portfolios.
Ah, Nunavut, what a mess, eh.
So, Ed Picco, not particularly well known for always having a brain and mouth in full synchronization and very excitable to boot, had told Bob Weber of Canadian Press (CP), a week ago, that Nunavut was on the way to hell in a hand-bag.
In my first reading of the CP wire story I though Ed might have arrange a coup d'etat in the territory and made himself dictator as it seemed, for a consensus government, he had to do a lot of single handed decision making:
"... "I've got to find that $100 million," he says. "Do I take it out of education? Do I take it out of health?"
Bob Weber
June 15, 2008
Canadian Press
The $100 million is what Eddy is now saying, on the high end, maybe the extra cost of bringing fuel into Nunavut for the fiscal year 2008-09.
What has Jim Bell of the Nunatsiaq News steamed up, is that - should I say it - the solution is to jump on the plane to Ottawa and ask for more money on top of the $1,080,850,000 being sent up to Nunavut already for 2008-09.
"The day this editorial was written, the world price [of crude] stood at $135. A year ago, when the fuel that keeps your house warm was pumped onto a tanker bound for Nunavut, the price stood at only $60.
GN officials knew, or ought to have known, that rising fuel prices would create a financial crisis for them. Yet they did nothing to prepare for it.
So far their "plan" consists only of this: head off to Ottawa and with a well-practiced whine, beg for more money.
"We need our federal partners to step up to the plate and say they'll help," Ed Picco told Canadian Press, neglecting to mention that the federal government already gives the GN more than $30,000 a year for every man, woman and child in the territory, making us the best-dressed beggars in Canada.
Cut costs? Nope. Get rid of inefficient government programs? Nope. Plan for the future? Nope - we're Nunavummiut. We were born to beg and nobody does it better.
Nunatsiaq News
June 20, 2008
What isn't mentioned specifically in Bell's editorial, it is in the CP story, is that the reason the increase in the price of fuel can have such a potentially damaging effect on the GN's fiscal situation is that the territory heavily subsidizes the consumption of specific types of fuel, either directly or indirectly, and itself is a heavy consumer of the stuff in delivering of public services to Nunavummiut.
The other-side of the story, of course, is that Nunavut is basically funded by the federal government by way, of transfers (see table to the left).
So what is a territory, that raises more revenue from tobacco taxes than personal income tax, to do?
1- Cut its direct and indirect subsidies?
I'd suggest some subsidies could be cut or eliminated particularly for those living in Iqaluit, Rankin Inlet and Cambridge Bay, the 3 reasonably large regional centers, but even here it would have to be done in a measured and likely income tested fashion. It is helpful to keep in mind when people like me, now from the outside, make suggestions, that out of a population of about 30,000 people Nunavut has about 18,000 tenants in social housing. Just one broad indication that in Nunavut there maybe some special problems with people being able to pay.
2 - Get out of delivering public services that use lots of fuel either directly or indirectly?
I'm not sure what public services that are heavy consumers of fuel could be cut. Do you shut down the schools? The 3 hospitals? The nursing stations or health centers in the more remote communities? No heat for the fire halls, maybe. Stop collecting raw sewage - yes in the Arctic, even large places like Iqaluit, the crap is pumped out of the houses. Stop delivering water to houses, again even in Iqaluit not everyone is on a utilitor system. No more of those routine expensive medical flights for the sick or injured and definitely no medivacs, eh.
3 - Does the GN off-load territorially provided services to local communities - the old trick used by some other governments?
Well I guess, that could be tried, but since the only source of revenue for all communities in Nunavut, with the exception of Iqaluit which can levy property taxes, is the GN. I suspect that idea might be a non-starter.
So, not with standing Jim Bell's concern about heading off to Ottawa I think that might just be a good idea.
I agree with Jim that the GN appears to have been caught napping, again. But maybe not, I hope. Maybe Nunavut officials and politicians have been busy behind the scene talking to their federal counterparts to lay the ground work, so-to-speak, for the potential fiscal disaster. Finding out what they may need to provide to federal officials to make a case for assistance. If nothing else getting the federally imposed borrowing limit increased from the current $200 million (the territory has about $60 million of their limit left after which it is illegal for them to borrow.) and those darn financial institutions always want to see the "Order in Council" authorizing the borrowing limit.
Unfortunately, all indications, after reading through most of the Hansards from the recently concluded Legislative session, is, they haven't been doing any such thing. But you can always hope or dream, eh.
Now, to keep the situation in perspective since, as yet, no payments will have been made for fuel thus the GN should still be on track with its budget projected fiscal situation. A potential massive deficit is just looming maybe on the close horizon.
I think cash transfers for fuel start in late July and end in October but the world changes and maybe transactions actually occur sooner now than in the recent past. So, even if the GN was on the plane today, I'd think the federal response to any concern from them would be: nothing has happened as yet.
To close this off, if I was a GN official I'd remind my federal counterparts that even though a new day for federal transfers both: Equalization and Territorial Financing; has come the original basis for determining the amount of the federal transfer for a territory was "expenditure need" and I would think that the large increases in fuel prices, particularly that of diesel fuel - I think it has increased by about 55% in a year while gasoline has only increased by 29% -, is well outside a territories control and thus expenditure need has increased.
____________________________________
*A perennial confusion? There are 26 communities if Bathurst Inlet is included. Bathurst is, I think, only occupied during the summer when the lodge is open
**All fuel is imported into Nunavut by the Petroleum Products Division (PPD) of the Department of Community and Government Services except any that maybe used by a mining operation (for example my new favourite: Baffinland's Mary River project which will have a tank farm capacity of 120 million liters for diesel a lot of which I expected will be used as a component of the explosives used in the mining operation). PPD is a revolving fund. Generally these type of funds neither make profits nor incur losses, they operate on a break-even basis over time and rely on sales revenue instead of direct government appropriations to finance activities. The GN uses its PPD as one mechanism to subsidize the consumption of fuel in the territory - i.e. PPD usually shows a relatively large deficit in the government's main estimates (see table on the left).
Technorati Tags: Energy, Inuit, Muddling, Nunavut