Yukon is going to be able to cash in more on resource development in its own backyard thanks to an updating of revenue sharing agreements today that was overseen by Prime Minister Stephen Harper during his northern tour.

Harper visited a copper and gold mine in Minto, about 240 kilometres north of Whitehorse, along with John Duncan, minister of aboriginal affairs and northern development.

Duncan signed an agreement with Yukon Premier Darrell Pasloski that amends two existing resource revenue sharing agreements –  the Canada-Yukon Oil and Gas Accord and the Yukon Northern Affairs Program Devolution Transfer Agreement.

The agreements cover revenues from oil, gas, forestry, land, water and minerals.

The federal government says the reformed agreements will ensure a greater portion of the revenues generated from the mining and resource economy in Yukon will stay in Yukon.

"Under this agreement, Yukoners will benefit to a much greater extent from the expected boom in mineral exploration and development during the decades to come," Harper said in a speech at the mine.

Harper is on his annual tour of Canada's North and he's touting the region's natural resource development as a "great national dream."

'Just scratching the surface'

The next 10 years will see more than 500 new development projects proposed for Canada, he said Tuesday. Those projects are expected to be worth more than $500 billion across the country, meaning jobs and economic growth, he added.

"Much of that growth will be here in the North," Harper said. "Indeed, such is the magnitude of the North’s resource wealth that we are only, quite literally, just scratching the surface."

The prime minister wouldn't touch the issue of China's CNOOC, which is moving to take over Calgary-based oil company Nexen. He pointed to the Investment Canada Act review, which is triggered automatically for foreign takeovers over $330 million. The government will look at whether the purchase would have a net benefit for Canada, a broad term that lacks a specific definition under the act.

Harper said he had to be careful answering questions about the bid because "as you know, there are various [foreign] investments that come before us for adjudication.... And obviously when they're of a certain size, that triggers an automatic review," he said.

"But obviously, there's a tremendous economic opportunity here and the fact that we are attracting investment not just domestically but from around the globe I think speaks very highly to the great future that our country has and that this part of the country in particular has."

The mining and energy sectors in the North already employ about 5,000 people, mostly Northern residents, according to figures provided by the federal government and thousands more could potentially be created through 24 projects that require federal regulatory approvals.

If they go ahead they could support an estimated 8,000 jobs and represent $38 billion in new investment, according to Harper's office. Other business sectors in the North and across Canada would also benefit from these projects, Harper said Monday.

Michael Byers, a political scientist who specializes in the Arctic at the University of British Columbia, said Yukon's existing resource revenue sharing agreement wasn't particularly favourable and that amending it so Yukon can keep a greater share is the right thing for Harper's government to do.

Byers said Ottawa and the governments in Nunavut and the Northwest Territories have also been trying to hammer out new revenue sharing arrangements and so far they haven't been able to reach agreement.

"It would be good if these resource revenue arrangements could be improved and concluded," said Byers, "But that's only part of what needs to be done."

He said Harper has a mixed record on resource development in the North because he has promised to increase it, but hasn't followed through on some of the things that are needed to support it – like infrastructure.

Need for infrastructure

"I'm pleased that the prime minister understands the opportunities in Canada's North but he hasn't really walked the talk yet in terms of some of the big ticket items," said Byers, mentioning all-season roads and a deep water port as examples of projects that haven't come to fruition yet.

"There hasn't been infrastructure put in by the federal government," he said.

Byers said a significant amount of resource development is projected not just in Yukon, but in Nunavut and the Northwest Territories in the next few years. Revenues will start to grow even more, adding more urgency to the negotiations with the federal government.

"That's why this issue of revenue sharing with the territories is so very acute right now," said Byers, who holds the Canada Research Chair in international law and politics and ran federally in the 2008 election for the NDP.

Harper said in Tuesday's news release that in addition to improving the regulatory process for new development projects, his government is taking other actions to spur development in the North. They include geological mapping to help companies find energy and mineral deposits.

But further development of the North's mining resources is easier said than done, according to economist Jacqueline Palladini.

"There are a lot of challenges that come with developing mines in the North," said Palladini, an economist with the Conference Board of Canada who specializes in economic forecasting in Yukon, the Northwest Terrorities and Nunavut.

Building a new mine in a remote community is extremely expensive, she said, and also means building accompanying infrastructure such as an air strip, road or port in order to transport whatever is being extracted.

"You also have to find a way to power operations as well. They also have difficulties finding the skilled labour in such remote areas of the North," she said, listing more of the challenges. "There are always delays in the North because you're so subjected to weather and environment and other factors so it's hard to have infrastructure projects move along at the same speed as they might in the South."

But for all the challenges, there are plenty of benefits to be had, said Palladini, noting that Nunavut's economy has doubled in the past 15 years, thanks in part to mining projects. More resource development projects mean growth in other industries, including transportation and communication, and they mean more jobs.

Income gains for those employed at the mines could spur housing growth and increased retail sales, said Palladini, and territorial governments benefit from income tax and corporate tax revenue.


  • This story has been edited from an earlier version that said the government has done geographical mapping in the North. The natural resources department has in fact done geological mapping.
    Aug 22, 2012 11:56 AM ET