Nunavut emerges from pandemic year in good financial shape, finance minister says

After projecting the territory's largest-ever deficit just four months ago, Finance Minister George Hickes says Nunavut is now emerging from the year-long pandemic in 'reasonably good shape' financially, thanks to federal relief funding for COVID-19.  

Hickes tables $2.4 billion budget, says heavy deficit curbed by federal pandemic relief

Finance Minister George Hickes tabled a $2.4 billion budget for the coming fiscal year, Feb. 23. He says the territory is saved from a heavy deficit because of an influx of pandemic money from the federal government. (Beth Brown/CBC)

After projecting the territory's largest-ever deficit just four months ago, Finance Minister George Hickes says Nunavut is now emerging from the year-long pandemic in "reasonably good shape" financially, thanks to federal relief funding for COVID-19. 

In the legislature on Tuesday, Hickes tabled a $2.4-billion draft operations and maintenance budget for the 2021-22 fiscal year. 

While the territory's pandemic spending to date amounts to around $129.4 million overall, much of the spending for isolation hotels, virus testing, safety equipment and to support airlines and schools was covered by the federal government, the budget states.

That's through a federal influx of $130 million for Nunavut to deal with COVID-19 expenses, and $78 million in new funding for medical travel for Inuit.

"The federal COVID-19 support remains critical to our efforts to fight the virus," Hickes said in a 40-minute budget address at the Legislative Assembly chambers on Tuesday. 

For the coming fiscal year, the territory projects a deficit of $14.3 million. That's half of what it projected before the pandemic in last year's $2.3-billion budget. The actual deficit for 2020-21 is $21 million.

And if the government doesn't spend a $75-million contingency fund this coming year, then it expects to leave the next government with a surplus after an October territorial election.

Budget includes rainy day fund for pandemic

But that contingency fund is what the territory says it has set aside for emergency use because of the pandemic. The fund is increased this fiscal year by $25 million, after a $50-million contingency fund for 2020-21 was spent in a matter of weeks because of COVID-19.

"This financial cushion will allow us to respond to unforeseeable events and pressures during the balance of this mandate without leaving the next government in bad shape at year end," Hickes said. 

To create pandemic-specific administration jobs, the budget puts another $4.8 million toward a Pandemic Response Secretariat. This money will create around 30 positions in the departments of health, community and government services, and executive and intergovernmental affairs. 

An Ottawa hotel used for Nunavut residents to isolate before returning home. The territory did not budget money for isolation hotels in the coming fiscal year, but says, that doesn't mean it won't have them. It says federal relief funds have covered most of its isolation expenses. (Leah Hansen/CBC)

But overall, the budget doesn't have large sums dedicated to the pandemic. 

"We don't know what those costs are," Hickes told reporters in an interview before his address. "We can anticipate what it has been costing us to date, but we don't have a finish line." 

He said many operational costs within departments, including health, are now set up and can be relocated from other areas where spending is not happening, like duty travel. He said some expenses, such as charters for test results, have been covered by federal support funds. 

If that federal support doesn't continue, the contingency fund will be used instead, Hickes said. 

No budget for isolation hotels

There is no money in the budget allocated for isolation hotels used for residents to isolate before travelling back into the territory. The finance department says this does not mean that use of the quarantine hubs will end.

For this year, spending on those isolation hubs is estimated to come in at roughly $94.2 million by the end of March, Finance officials say. 

That breaks down to $64.2 million to isolate both medical and regular travellers through the Department of Health, and $30 million to isolate out of territory construction workers through the Department of Community and Government Services. 

As of the end of December, the Government of Nunavut had given more than $55 million to support Nunavut's private airline companies, including Canadian North, Calm Air and Ken Borek. Agreements for current support are still being negotiated. 

If the airlines make a profit they have agreed to return some of that money, the Finance department says. 

Territory lobbies for increase to federal transfers 

Hickes said he is working with the premier and the Health minister to see more in federal transfers, to recognize an increase in health care costs to the territory. 

The majority of revenues for the budget come from federal transfers. Those should makeup $1.78 billion of next year's budget, after Nunavut's Territorial Formula Financing payment — federal equalization payments to the territories — grew by four per cent this year. 

The territory is also expecting to receive $110 million through "other federal transfers," which will include $44 million through the Canada Health Transfer, Hickes said.

Money for the Department of Health makes up just over a quarter of the draft budget, at $471.1 million. That's an increase of $20 million for Health compared with last year. 

"We can do this because Canada agreed to increase its co-pay towards medical travel," Hickes said. 

Hickes wore the same pair of work boots he sported for budget day last year, saying he hasn't had time to take them off. (Travis Burke/CBC)

While Nunavut usually spends over $100 million each year on medical travel, the territory expects to see $20 million in savings for medical travel next year through the Non-Insured health Benefits Program. 

That's a national healthcare fund for Indigenous people run by Indigenous Services Canada that covers travel to appointments from remote locations. 

This money means the Health Department can hire more healthcare professionals, he said, including pharmacists and a CT scan technician. It will also be used to pay for in-territory cancer screening. 

Non-pandemic spending

Pandemic spending aside, this year's budget highlights $10.6 million to go to out-of-territory mental health and addictions treatment.

Hickes said a Nunavut-based addictions and trauma treatment centre will need to be carried on by the next government. 

For the Nunavut Housing Corporation, money is budgeted to build 106 new public housing units 

"This is something that simply cannot wait for better times," Hickes said. 

The budget looks to add $3 million to the Department of Justice for an "independent civilian oversight of serious incidents involving the RCMP." It also proposes hiring three new RCMP officers, and increasing jobs for Inuit at community police detachments. 

Other highlights of the budget include: 

  • $8.7 million to hire more teachers 

  • $5.8 million to strengthen computer networks after the ransomware attack 

  • $4.5 million for health services like security at health centres 

  • $2.9 million to staff the new Aaqqiqiqiarvik correctional facility in Iqaluit this fall

  • $2 million to improve school bussing

  • $1.3 million for homeless and safe shelters 

  • $310,000 for an independent Corrections Investigation Office

It's customary for finance ministers to wear a notable pair of shoes while delivering their budget address. Hickes said he wore the same pair of work boots he sported for budget day last year, because he hasn't had time to take them off. 

Nunavut MLAs will review the draft budget over the coming weeks. The current winter sitting of the Legislative Assembly runs until March 16.