Heritage Fund contributions upped to 25 per cent

Heritage Fund contributions upped to 25 per cent
Territorial MLAs sit down for the start of winter session on Feb. 6.Photo: Bill Braden.

Widespread dissatisfaction by regular MLAs over the department of Finance’s decision to allocate only 5 per cent to the territory’s burgeoning Heritage Fund has since pushed the minister to boost contributions to 25 per cent of incoming resource revenues from devolution.

A maximum of 5 per cent had been set out in the 2014-15 budget, announced Feb. 6, with the remainder of the anticipated $45 million per annum in first-time royalties going towards infrastructure and debt repayment.

But after staunch disapproval from several MLAs, Finance Minister Michael Miltenberger announced to applause on Tuesday afternoon that 25 per cent of revenues from non-renewable resources would be put away for future generations.

“While public reaction to the budget has generally been positive, members have clearly indicated that they disagree with the proposed allocation for the Heritage Fund,” Miltenberger told the House.

“We have heard these concerns and, in the spirit of consensus government, will be taking members’ wishes on this matter into account by allocating 25 per cent of resource revenues to the Heritage Fund beginning in 2015-16 when revenues begin to flow to the government.”

Miltenberger said the decision, while accommodating the interests of MLAs, will have an impact on future budgets, meaning less money for infrastructure, as the government’s fiscal responsibility policy limits the amount the territory can borrow for projects.

With many infrastructure projects on the books, funding will have to come from elsewhere.

“We will have to revisit our fiscal strategy,” Miltenberger said. “We will need to find offsetting reduction from the O&M (operations and maintenance) base and protect the infrastructure budget.”

Miltenberger said the change in proposed Heritage Fund savings will see an estimated $10 million taken from other parts of next year’s spending.

The increased allocation will see over $400 million in Heritage Fund savings in 20 years if the GNWT captures the maximum revenues of $54 million per annum at a 5 per cent rate of return. Conversely, there would have been $100 million saved in two decades at the same rate.

Budget consultations carried out last fall heard a variety of input from residents across the territory. Though some agreed with the government’s original plan to allocate 5 per cent, with some saying all revenues should go to infrastructure, the majority called for more savings on a range varying from 25 to 100 per cent.

It was that public feedback that had Frame Lake MLA Wendy Bisaro particularly disappointed with the department’s decision to stick to the 5 per cent plan. Both she and Hay River North MLA Robert Bouchard led the charge the day after the budget was released, condemning the decision to ignore the united front of regular members calling for 25 per cent last fall.

“All input except that of Cabinet was ignored, and yesterday’s budget planned around 5 per cent of the resource revenues going to the Heritage Fund, and that decision was made long before any consultation with residents or MLAs took place. Why bother to consult? Why bother to spend the money to consult? Why bother to give residents and MLAs hope that their opinions matter?” Bisaro said.

Similar speeches meant to criticize the 5 per cent were subsequently put aside on Tuesday in the House, though MLAs continued to chide Miltenberger for his flip-flop, with Range Lake MLA Daryl Dolynny calling the announcement “nothing less than a last minute gong show before regular members.”

Sarah Daitch, an NWT representative of the national public policy group Action Canada, lauded the change in tone from Miltenberger as the group’s recommendations for the fund were tabled in the legislature on Tuesday.

Action Canada, which released a report on the NWT Heritage Fund in time with the budget, called for more than 5 per cent and made several other recommendations for ensuring the transparency and sound management of the fund itself.

“Minister Miltenberger’s announcement of 25% into the Heritage Fund is huge step forward for future generations of Northerners,” she voiced online via Twitter, adding that the announcement “shows that consensus gov’t can be effective.”

Daitch said now it is time for the GNWT to focus on “good fund governance.”

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