While the N.W.T. government has presented its 2021-22 budget as one that aims to project stability during a global pandemic, observers are saying it lacks the foresight to tackle a troubling financial future.
Finance Minister Caroline Wawzonek presented the budget Thursday. It allocates $117 million in new spending, much of it dedicated to the government’s response to the COVID-19 pandemic.
The budget also includes a cut of the territory’s small business tax rate from four per cent down to two, a development N.W.T. Chamber of Commerce executive director Renee Comeau said was welcome news.
“This was something that the business community has been asking for, for a significant period of time,” Comeau said, adding that it puts the N.W.T. on par with some of the lowest rates in Canada in B.C., Saskatchewan and Yukon.
“For those small businesses, those reductions … give them the incentive to further invest in their businesses. It actually increases the tax revenue the GNWT will see going forward.”
However, Comeau expressed disappointment at the lack of support offered to the struggling tourism sector, facing further uncertainty due to travel restrictions that could extend into the summer and beyond.
The budget contains funding for a 2025 tourism strategy, but no additional relief for operators in the short term.
“Not to be a negative Nelly, but you can’t put money towards a sector that might not even exist in 2025,” Comeau said. “We need to protect and save our tourism, our hotel and our hospitality sectors right now.”
The N.W.T.’s tourism industry, devastated by the COVID-19 pandemic, did not receive any increased direct support in the territory’s proposed 2021-22 budget. (Aurora Holiday/Facebook)
‘We’re just chasing dreams’
Frame Lake MLA Kevin O’Reilly offered praise for small investments in fisheries, arts and the film industry in the budget, but said that in his view, it doesn’t go far enough.
“There is some potential to diversify our economy in those ways, but there’s also significant investment in continuing our dependence on mining, oil and gas,” he said, pointing in particular to an investment in creating a petroleum resources strategy.
“There’s just no prospect of oil and gas, I think, ever coming back here,” he said. “The sooner we realize that and redirect those resources to diversify and strengthen our economy … we’re just chasing dreams or wishes that’s never going to happen.”
O’Reilly also noted that little in the budget addresses economic recovery from the COVID-19 pandemic, something that may be addressed with supplementary appropriations during the year.
“It’s mentioned, talked about, but we still don’t have a plan from cabinet to do that,” he said.
“I’m pleased there’s no reduction in services in this budget. I think if this was four years ago, we’d be looking at major cuts, from the previous cabinet. But there’s a lot more to be done to help diversify our economy, stabilize revenue sources, and build a more resilient economy.”
Speaking Friday morning to CBC North, Wawzonek said that there are elements of the budget that show a shift toward larger changes in the economy and spending, pointing to a department-by-department spending review, an ongoing review of procurement processes, and an upcoming red tape review.
“I don’t want to stand by and say that we’re just going to change XYZ spending without evidence,” Wawzonek said. “That’s not a prudent way to handle our government fiscal situation.”
Wawzonek pointed out that despite the pandemic bringing some issues to the fore and changing immediate priorities, the territory’s fiscal issues are not new.
“[It’s] the same challenge we had last year,” she said. “Nothing’s changed, but we’re building on it. The work’s getting done.”
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
