Despite revenues increasing, the territorial government has still had to drastically cut down its forecasted surplus for its 2021-21 budget.
An increase in money being sent by the federal government outpaced drops in revenue in other areas like royalties from diamond mining and a decline in tax money, according to the latest update presented to the media by finance minister Caroline Wawzonek on Monday.
More than $92 million came from the federal government to cover COVID-19 supports, but costs totalled more than $175 million. This left the territory paying the remaining $82,704,000.
This meant the surplus of $203 million the territorial government had been forecasting for this year — after incurring a deficit of $70 million in 2019-20 fiscal year — has been chipped away, said Wawzonek.
The surplus shrinking could impact the capital funding — for things like infrastructure projects — the territory can provide in the future, said Wawzonek.
“It’s not necessarily going to impact what’s happening this next couple weeks in the legislature, but we may well be seeing that we simply don’t have as much to spend in the next year or two years after that,” said Wawzonek.
However, the negative impacts of the pandemic had been mitigated by the fact the territory gets 80 per cent of its funding from federal transfers from the government.
Wawzonek added future revenue decreases could be mitigated by the Territorial Formula Financing — an annual unconditional transfer from the federal government to each territorial government.
The TFF increases as revenue drops, allowing the GNWT to manage and respond to “revenue shocks,” said Wawzonek.
Wawzonek also added that modelling for the impacts of COVID-19 is a continuous process, and the forecast may change in the future.
Job recovery
The territory has lost more than 4,000 jobs during the pandemic, mainly in the service sector.
Despite the losses, NT’s job recovery is faring comparatively well compared to elsewhere in the country, according to Wawzonek, with total job numbers set to be at 90 per cent of where they were pre-pandemic by the end of this year.
A large reason for this is the high proportion of government workers NT has compared with other provinces. More than 8,000 workers are employed by the GNWT or some level of municipal government, out of a little more than 28,000 — when job numbers were at their peak pre-pandemic.
Despite the positive outlook, jobs connected to international markets or health trends are unlikely to recover as quickly as others, said Wawzonek.
Tourism is the most notable example.
The balance of jobs that are full-time v.s. part time may also not recover to pre-pandemic levels. This will mean job quality, in both hours and pay could be impacted, added Wawzonek.
