Our National Competitiveness
and Canada’s Territories
Photos
Photos
Pho
tos:: Cana
anadia
d n Tour
dia
Tour
u ism
m Co
omm
mmi
miss
missi
sssiion
ion
Photo:
Pho
to: Pa
Paddy
ddy Pa
dd
Palli
llin
lli
n
Get plugged in.
As Canada’s largest and most influential business association, we are the primary and
vital connection between business and the federal government. With our network of over
450 chambers of commerce and boards of trade, representing 200,000 businesses of all
sizes, in all sectors of the economy and in all regions, we help shape public policy and
decision-making to the benefit of businesses, communities and families across Canada.
Be heard.
“The economic potential of the territories is fully realized through a
robust private sector…”
—A Northern Vision: Building a Better North, Premiers of the
Northwest Territories, Nunavut and Yukon, 2014
Table of Contents
Introduction
3
The Territories’ Place in Canada
4
The Building Blocks of a Private Sector-led Economy: Infrastructure, People,
Regulatory Clarity and a Constructive Relationship with Aboriginal Peoples
8
The Long Game: Reducing the Dependency of the Territories on the
Federal Government
18
Conclusion
21
Roundtable Participants and Other Stakeholders
22
Introduction
Canada needs economic strength in all of its regions
to compete. Reducing the dependence of Canada’s
territories on the federal government for financial
transfers and jobs will improve our national
competitiveness. With the right tools, business in the
territories can make economic growth and increased
independence from the federal government happen.
The potential of businesses in Yukon, the Northwest
Territories and Nunavut to improve the economic
status of the territories—and the entire country—has
been a focus for the Canadian Chamber of Commerce.
The territories are rich in oil, gas and mining resources
and, despite declines in these sectors, the world is
going to need these natural resources for a long time
to come. The relatively rapid impact of climate change
in the Arctic will make these resources easier to
extract and transport when prices improve. There has
never been more interest—at home and abroad—in
developing our territories.
In 2014, the lack of economic development tools
for businesses in Canada’s territories was included
in the Canadian Chamber’s Top 10 Barriers to
Competitiveness. It was included again in 2015.
Our intent was to identify the key federal policy levers
that give businesses the tools to grow and to present
our findings—along with recommendations—to the
federal government. The territories are creations of
the federal government. Although Yukon and the
Northwest Territories have province-like powers, such
as regulatory oversight of inland natural resources,
the federal government’s financial and policy footprint
dominates. In business peoples’ minds, the only path
to sustainable economic development is for more and
more of the territories’ economic footprint to be filled
by the private sector and to eventually overtake the
dominant role played by the federal government,
which also makes up the bulk of the finances of the
territorial governments.
While territorial businesses face many of the same
competitive challenges as their counterparts elsewhere
in the country, the overwhelming presence of
government—as financiers, customers, employers and
regulators—is both a blessing and barrier.
Photo: As
Asyme
ymetri
tric/J
c/Jaso
ason
n Van Bru
rugge
g n
Building upon the work we started in 2012, during
2014 and early 2015, we met with business people
in the three territories to learn more about the tools
they had told us are critical to their success and to
increasing their economic footprint:

Infrastructure funding and investments

Attracting and retaining talent

Clarity in regulatory oversight in natural
resources

A constructive relationship with Aboriginal
peoples

Shifting the dominance of territorial
economies by government to the private sector
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
3
The Territories’ Place in Canada
Canada’s territories occupy 40% of its landmass,
yet roughly 3% of Canadians live there. Much of
the country’s awareness of the territories is gleaned
through the media coverage of the impacts of climate
change on wildlife and traditional hunting, of the
increased accessibility through the Northwest Passage
and of the debate over who owns the natural resources
under Arctic waters. Canadians’ attention is also
drawn to the territories periodically through stories
about the exorbitant price of food. More recently, we
have been spellbound by the discovery of the wreck of
the HMS Erebus, Sir John Franklin’s ill-fated ship that
remained entombed underwater for more than 160
years off Nunavut’s coast. Most Canadians are also
aware that their tax dollars sustain the territories.
With the exception of those who live, work and
invest in the territories, most Canadians are not
aware of their potential—with their vast natural
resources (including minerals, oil, gas, fish
and more), breathtaking geography and young,
fast-growing Aboriginal population—to contribute to
our national competitiveness and collective prosperity.
Territorial businesses believe much of this potential
is constrained by federal and territorial policies
that perpetuate the territories’ dependence upon
government. If these policies were examined and
allowed to evolve, the balance between the economic
dominance of government would tip towards
business, and all Canadians would benefit.
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
5
The territories will lead Canada’s
economic growth in 2016
3.3%. This compares to 2.9% in Yukon and
- 3% in the Northwest Territories. (Canada’s overall
GDP growth is expected to “hover near 2%.”2)
According to the Conference Board of Canada1,
Nunavut will outpace the other territories’ GDP
growth—and of the rest of the country—in 2015 at
2015 Real GDP by Province.
per cent change, basic prices, $2007.
-3.5
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
NUN
BC
MAN
ONT
PEI
QUE
NB
NS
SASK
NL
AB
YUK
NWT
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Canada:2%
Sources: The Conference Board of Canada; Statistics Canada
15
1
Territorial Outlook, Pedro Antunes, Deputy Chief Economist & Marie-Christine Bernard, Associate Director, Provincial/Territorial
Outlook, Conference Board of Canada, March 30, 2015
2
Ibid.
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
6
Nunavut’s growth in 2015 is primarily due to the
Mary River Mining project, which represents a $740
million investment.3 There is also significant capital
investment in the territory including the High Arctic
Research Station in Cambridge Bay (scheduled to open
in 2017), the Iqaluit Airport and the Iqaluit Aquatic
Centre.
meantime, says the Conference Board of Canada,
public infrastructure projects will assist with economic
growth until mining regains momentum.
However, in 2016, all three territories are expected to
see positive GDP growth, while Canada’s will remain
almost the same. Yukon is expected to lead the way
(in the territories and in Canada) with 3.4% growth.
The NWT will be second amongst the territories at just
under 1% with Nunavut coming in third at under 0.2%
GDP growth, primarily due to capital investments
tapering off.
Weakness in the Yukon and Northwest Territories’
economies is due to low commodity prices. Resource
development will continue in both territories—albeit
not at the same pace as in the past few years—and
pick up when prices start climbing again. In the
2016 Real GDP by Province.
per cent change, basic prices, $2007.
0.0
0.5
1.0
1.5
YUK
MAN
BC
NB
ONT
QUE
PEI
NS
SASK
ALB
NWT
NUN
NL
2.0
2.5
3.0
3.5
4.0
Canada:2.2 %
Sources: The Conference Board of Canada; Statistics Canada
16
3
Globe and Mail, January 11, 2013
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
7
Public sector dominates territorial
economies
The federal government transfers funds to provinces
and territories to support the delivery of programs,
such as healthcare and post-secondary education.
“Have not” provinces receive federal transfer
payments to allow them to provide programs to
their citizens while keeping their taxes at levels
comparable to “have” provinces. The Territorial
Funding Formula (TFF) transfers federal funds to the
territorial governments in recognition of the high cost
of providing services and programs to their residents.
In the 2014-15 fiscal year, the federal government
transferred $65 billion to the provinces and territories
(just over $1,800 per capita overall). The TFF makes
up—by far—the bulk of the territories’ total revenues.
Total 2015-16
federal transfers
$ per capita
% of total
provincial/territorial revenues
Alberta
$5.2 billion
1,259
12
British Columbia
$5.8 billion
1,259
13
Manitoba
$3.4 billion
2,626
23
New Brunswick
$2.6 billion
3,468
33
Newfoundland & Labrador
$676 million
1,284
9
Northwest Territories
$1.3 billion
29,003
68
$3 billion
3,185
33
Nunavut
$1.5 billion
39,839
85
Ontario
$19.2 billion
1,404
16
Prince Edward Island
$544 million
3,720
34
Quebec
$19.6 billion
2,390
27
Saskatchewan
$1.4 billion
1,259
12
Yukon
$897 million
24,722
74
Province/Territory
Nova Scotia
Source: Department of Finance, Federal Support to Provinces and Territories, www.fin.gc.ca/fedprov/mtp-eng.asp
Province-like powers, but not quite
provinces
Even for Yukon and the Northwest Territories,
which have completed devolution4 agreements with
the federal government, the TFF is critical to their
economies.
4
“It’s that we have province-like powers while having the
benefits of being a territory, and that’s most significant
dollar-wise, in terms of the funding arrangements with the
federal government.”
—Hon. Bob McLeod, Premier of the Northwest
Territories, Canadian Politics and Public Policy, July/
August 2014
Devolving the governance of various sectors from federal to territorial oversight is one of the priority areas of the federal government’s
Northern Strategy. Yukon and the Northwest Territories achieved devolution over the last elements of their economies under federal
jurisdiction —natural resources, inland waters and lands—in 2003 and 2014 respectively. Devolution negotiations are underway between
Nunavut and the federal government.
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
8
The Building Blocks of a Private Sector-led Economy:
Infrastructure, People, Regulatory Clarity and a Constructive
Relationship with Aboriginal Peoples
Infrastructure
“The only way this territory—or any territory—is going
to move forward is through the health—mental, physical
and economic—that comes from adequate infrastructure,
adequate housing, good schools, transportation and healthy
and affordable food.”
—Iqaluit business person
Business people in all three territories said other
countries are way ahead of Canada in investing in
the infrastructure of their Arctic regions and Canada
should be looking to those countries to improve upon
current programs.
Like its geography, the territories’ infrastructure
gaps are big. Depending upon which territory (and
where in each), infrastructure deficiencies range
from seasonal roads, unpaved runways, inadequate
housing, expensive and environmentally-harmful
energy and 20th century telecommunications. For
example, the Baffin Fisheries Coalition has to offload
its catches in Greenland because there are no deep-sea
ports in Nunavut. The needs are great and resources
are stretched. Some business people said they feel
they live in third world conditions compared to
communities in other Arctic nations.
“Not having a home is the worst feeling you can have, and
many people face that daily. Until you can address these
fundamental issues, creating more trust of business is not
on the radar.”
The Northwest Territories and Nunavut received good
news in the 2015 federal budget , which proposes to
increase the debt caps for each territory to $1.3 billion
and $650 million respectively (pending Governor-inCouncil approval)5. This will increase the amounts
these territorial governments can borrow to invest
in the infrastructure needed for the public good and
for private sector economic development. However,
business people in the territories believe there are
ways to leverage public dollars through partnerships
with business and Aboriginal communities and
through more creative funding mechanisms.
“In the grand scheme of things, investing in the territories
isn’t that expensive but would result in significant economic
benefits to the rest of the country.”
—Iqaluit business person
Some business people had experience with PPP
Canada and the Building Canada Fund and were
frustrated by there being only two application intakes
per year, having to wait several months for a decision
and then, if successful, having funding limited to
25% for for-profit projects. However, business people
feel that funds could be more effectively used—
and projects completed—if funds were provided
to companies that are in the business of planning,
constructing and managing those kinds of projects.
“It’s as if profit is a dirty word,” said one Iqaluit-based
business person.
—Iqaluit business person
5
Yukon’s Territorial Borrowing Limit (debt cap) of $400 million was set in 2012 and remains unchanged.
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
9
Iqaluit Airport Improvement
Project
Recognizing that improvements to Iqaluit’s
airport would enhance accessibility to Nunavut
and increase private sector investment, the
Government of Nunavut sought private sector
partners to assist with the design, construction
and ongoing management of the project. In 2013,
Arctic Infrastructure Partners (AIP) was chosen
as the private sector partner. AIP will also be
responsible for ensuring Nunavut Land Claims
Agreement (NCLA) beneficiaries are employed
during the construction period and for ongoing
operations.
nearly $100 million over the 30-year life of the
project. The total cost of the project, which
includes a new terminal, a services building and
runway improvements, is $298.5 million of which
the Government of Nunavut will contribute
$68.7 million and PPP Canada will contribute
$72.8 million. AIP’s investment in the project (the
remainder) will be recovered from payments
from the Government of Nunavut based on the
facilities meeting pre-determined performance
specifications.
The construction phase of the project—which
began in 2014—is to be completed in 2017. To
date, taxiway improvements have begun as has
construction of the new terminal building.
The Government of Nunavut estimates that
pursuing a private sector partnership will save
In Yukon, business people said First Nations
development corporations need to be considered
as part of the capital pool mix. An example of how
successful partnerships between business and First
Nations can be is the investment in Air North:
Yukon’s Airline by the Vuntut Gwitchin First Nation
of Old Crow, which made it possible, in 2002, for
the airline to purchase its first Boeing 737 jets. There
is, however, a tension between the First Nations
economic development corporations and the federal
government, which claws back 50% of its transfers
for every dollar of revenue from other sources. This
disincentive to First Nations to invest and grow their
economies needs to be addressed as it means there
are tens of millions of dollars of stranded capital in
Yukon that could be invested in housing and other
much needed infrastructure on and off their lands. The
capital available from First Nations could be leveraged
more effectively if they were encouraged to pool their
funds for infrastructure projects.
6
Territorial Infrastructure Bank
Business people in the three territories cited the
Alaska Industrial Development and Export Authority
(AIDEA) as a model for encouraging private sector
investment. AIDEA “front ends” investments in
infrastructure for private sector projects, such as
mines, by issuing both tax-exempt and taxable bonds
which, in addition to a financing fee, are repaid by
the private sector proponents. In 2014, AIDEA (which
declared a $176 million dividend to the State of
Alaska) issued $51.2 million of bonds to the Greater
Fairbanks Community Hospital Foundation to fund
renovations, including new operating rooms, to the
hospital, creating more than 150 construction jobs.6
Business people across the three territories said
they thought a variation of the AIDEA concept—a
Territorial Infrastructure Bank—would kick-start
getting much needed infrastructure in place. The
idea—much like the Development Financial Institution
(DFI) announced by the federal government in
Alaska Industrial Development and Export Authority, 2014 Annual Report.
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
10
the 2015 federal budget to facilitate international
development—would see the federal government
provide low-interest financing (nobody can borrow
money at rates lower than the government) to private
sector proponents to plan, construct and oversee
public infrastructure in the territories or private
infrastructure for which an ancillary public benefit
could be demonstrated. Like the DFI, a Territorial
Infrastructure Bank would also provide technical
assistance and administrative support, playing the
role of catalyst to coordinate the involvement of
companies, private sector banks, Aboriginal economic
development corporations, institutional investors
and non-governmental organizations (NGOs) that
otherwise would not be able to undertake such
ventures. It could also facilitate the pooling of
infrastructure projects in territories to make the most
effective use of resources and improve the business
case for moving projects forward.
Starting a new financial institution from scratch
would be cumbersome and expensive. An alternative
is to establish a Territorial Infrastructure Bank as
a subsidiary of the Business Development Bank of
Canada, which has significant private sector funding
expertise and presence in the territories.
“There needs to be focus on one issue—be it energy or
housing—and addressing it effectively. Could the federal
government focus on it, fund it and regulate it using private
sector partners for implementation?”
—Iqaluit business person
When asked what infrastructure improvement
would open up the most capacity in the territories’
economies, energy was mentioned most. Not
only is energy very expensive in the territories,
the predominance of diesel generation carries a
heavy environmental footprint. The federal and
territorial governments need to be more open
to—and supportive of—alternate forms of energy,
particularly to supplement diesel, including nuclear,
hydro, wind and LNG. Also on an environmental
theme, one business person suggested that the
federal government should subsidize the backhaul of
recyclable materials from the territories to southern
Canada.
Recommendations
The federal government must:

Meet the commitments it has made under treaties
and land claims agreements

Work with First Nations to modify the claw
back provisions of their funding agreements to
encourage economic development
The federal government should create incentives for:

First Nations to pool their funds to fully
leverage their capital potential for infrastructure
investments

Alternate energy providers including nuclear,
hydro, wind and LNG to establish themselves in
the territories

The backhaul of recyclables from the territories to
southern Canada
The federal government should consider establishing
a Territorial Infrastructure Bank as a subsidiary of
the Business Development Bank of Canada to act as
a low-interest source of financing/financing partner
for infrastructure in the territories and a facilitator of
partnerships amongst itself, companies, private banks,
Aboriginal economic development corporations,
institutional investors and non-governmental
organizations (NGOs).
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
11
Attracting and retaining talent
“So much employment in the territory is created by
government—federal and territorial—that it tends to inflate
wages and make it just that much more difficult for business
to do business. It’s difficult to comprehend the leap that
would have to be taken to turn the situation around.”
—Whitehorse business person
Territory
% of workers employed by governments
(federal, provincial/territorial, municipal, Aboriginal,
Crown Corporation)
Northwest Territories
43.77*
Nunavut
62.69**
Yukon
42.9***
Canada
20.13****
Sources:
*
**
***
****
Northwest Territories Bureau of Statistics, NWT Labour Force Activity, March 2015
Nunavut Bureau of Statistics, Labour Force Survey, March 2015
Yukon Bureau of Statistics, Yukon Employment 2015
Statistics Canada, The Daily, Labour Force Survey March 2015
When it comes to attracting talent, employers in
Canada’s territories have—in addition to their relative
remoteness and high cost of living—the added
complexity of the substantive presence of government
as a competitor for employees. Many private sector
employers cannot compete with government on
salaries and benefits and find themselves as the
trainers of government employees. One Whitehorse
business person said territorial government employees
often come to his quick service restaurant for their
coffee breaks to observe his front line staff as prospects
and offer jobs to those they believe have the skills
needed by the government.
However, while the private sector often cannot pay as
well as government, it can be a better, more supportive
place to work for Aboriginal peoples because many
employers can be more flexible regarding work hours
and taking time off for hunting, etc.
Policies made in Ottawa can cause harm
Territorial employers also deal with the impact of
federal human resource policies made in Ottawa that
have unintended, harmful consequences on businesses
with a much smaller talent pool. Changes to the
Temporary Foreign Worker Program (TFWP) were
often mentioned as one of the most significant, recent
developments retarding economic growth in the
territories.
Whitehorse business people agreed that the
Temporary Foreign Worker Program was instrumental
in helping businesses in Yukon get off the ground.
An example is the Canadian Tire store in Whitehorse
that changed the entire retail dynamic there and, said
business people, would never had seen the light of
day without the TFWP. “It certainly wasn’t going to be
staffed by people leaving their government jobs,” said
one business person.
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
12
Yukon had a TFWP pilot project that saw a very
quick (two to three-week) turnaround for employers
needing workers. The business would apply and, if
approved, would target an individual to bring in for
two months to a year. If the employee worked out
well, the business applied to put the person into the
Nominee Program, ultimately securing permanent
residency. “It was working well and was going to
be followed elsewhere. Because of issues in other
jurisdictions, ‘poof’ it’s gone,” said one business
person. Several business people were also frustrated
with the misunderstanding that the TPWP is used
only for low-paying positions and was keeping wages
depressed.
“Now the government has decided to enter the market and
drive wages up. Officials say, ‘If you can’t pay the wages
necessary, then perhaps you shouldn’t be in business.’
Agriculture has been exempted because agriculture is
desirable. Well, small business is desirable in Canada. The
federal government has a fundamental misunderstanding of
the needs of SMEs in the territories.”
—Whitehorse business person
The president of one company, who was recruiting for
a senior manager through the TFWP, understood that
the program was tightening up for low-wage workers.
He was surprised when he was advised by Service
Canada to be prepared to “pay double the salary I was
offering, take someone who wasn’t qualified and/or
go to university recruitment fairs to find a Canadian.”
He finally had to escalate the issue to his Member of
Parliament and, after four months, got the required
permit. “This person has so much experience to
share,” he said. “We talk about our productivity gap.
We should be seeking senior people who can help us
improve our performance no matter where they come
from.”
7
Business people agreed that shutting down the flow
of immigration is counter-intuitive when there are not
enough people to fill the jobs available. Changes to
the Temporary Foreign Worker Program have made
the already tight employment situation in Yukon only
more so. Several business people see the situation
getting worse with the anticipated uptick in the
mining sector.
So can broken commitments
Employers in the territories’ mining sector—in
addition to being hit by federal tax measures that have
adversely affected their competitiveness7—have been
constrained in their ability to train the workers they
need by the failure of the federal government to fulfill
its commitment to be the private sector’s funding
partner as it had been under the Aboriginal Skills
and Employment Partnership (ASEP), which was
discontinued on March 31, 2012.
To address the elimination of ASEP funding, all
three territories have worked together to develop
the Northern Minerals Workforce Development
Strategy (NMWDS), which was discussed with the
federal government in the fall of 2011. The cost of
the NMWDS is $200 million over five years with
the territorial project partners, including mining
companies, bearing 50% of the costs. (Since the
elimination of ASEP funding, mining companies and
partners in the territories have covered the remaining
gap.) Mine training organizations (MTOs) have also
restructured their funding portfolios and sought
training dollars on a project-by-project basis through
the Skills Partnership Fund. This piecemeal approach
is a temporary solution and only works for small
projects. The funding envelope needs to provide
proponents with greater certainty, capacity and a longterm solution.
The elimination of the Corporate Mineral Exploration and Development Tax Credit, the Accelerated Cost of Capital Allowance for mining;
reduction of the Scientific Research and Experimental Development program; and rendering of pre-production expenses ineligible for
Canadian Exploration Expense deductions.
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
13
“In the mining resource sector, Aboriginal
government, territorial government and business
have worked together with the federal government.
We’ve invested $33 million over the past 11
years in training 5% of the NWT’s labour force.
These are good jobs; people are moving up in
the management structure, buying homes, etc.
However, we depend upon the federal government
for that money. Without it, I cannot go out to the
mining sector and say, ‘I’ve got 50 cent dollars
to help you get the people you need to run your
operation.’ Most of the people—who are just about
all Aboriginal—are younger, better educated and
don’t have a criminal record. When we started out,
75% of our program participants had a criminal
record.”
—Yellowknife business person
Companies need to make time to provide
opportunities for young people to be trained on it so
they have the skills for mining and other construction
projects. Many tools are there; they need to be used,”
said an Iqaluit business person.
Employers in the territories need Aboriginal
employees to succeed. “It’s not philanthropy; it
makes business sense because they live here,” said
one business person.9 Employers said they know they
need to be flexible with Aboriginal employees. While
many Aboriginal people aren’t willing to work nine
to five and wait two weeks for their pay, employers
are bound by government taxation and workers’
compensation rules that make other arrangements
impossible. “What we’re doing today isn’t working, so
we need to think of ways to make it work.”
Recommendations
The federal government must:
Business has a role to play too
Fifty-four per cent of the respondents of the 2014
NWT Survey of Mining Employees stated they
resided outside of the Northwest Territories.8
Several business people said fostering a homegrown
workforce in the territories would be helped by
bringing entrepreneurship into the classroom, and
they said they would support a Dragon’s Den or
Junior Achievement-type program in school. “Small
companies need to get into the schools early and give
students a sense of the possibilities. They need to see
the light at the end of the tunnel, that there are good
jobs for them if they complete high school and get
training,” said an Iqaluit business person.

Allow for flexibility to address the unintended/
unforeseen consequences of its human resources
policies in more remote locations of Canada, for
example the territories, where workers cannot
move amongst communities and it is more
difficult to recruit workers from other regions

Restore its 50% per cent funding partnership with
mine training organizations in the territories,
as defined in the Northern Minerals Workforce
Development Strategy

Work with territorial governments to
encourage businesses to become involved in
entrepreneurship programs in elementary and
secondary schools
Mentorship programs are also incredibly important.
“Every hamlet in Nunavut has heavy equipment.
8
NWT Bureau of Statistics, Government of the Northwest Territories, December 2014
9
The territories have the highest proportion of Aboriginal peoples: Nunavut (86.3%), the Northwest Territories (51.9%), Yukon (23.1%).
Source: Employment and Social Development Canada, Canadians in Context, Regional Aboriginal Populations, www4.hrsdc.
gc.ca/[email protected]?iid=36
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
14
Clarity in regulation
Businesses want to operate within predictable,
acceptable regulatory parameters. Without them, the
cost of business can become unwieldy and investment
unattractive and/or impossible.
The three territories are at different stages of complete
regulatory self-determination. The last sector devolved
to territorial oversight is inland natural resources.
In 2003, Yukon became the first territory to assume
oversight over its natural resources and its YESAB
(Yukon Environmental Socio-economic Assessment
Board) is widely regarded an effective regulatory
model. The YESAB is the only organization in Canada
that has the responsibility to combine the assessment
of both the environmental and socio-economic
impacts of a project. On April 1, 2014, the Northwest
Territories assumed oversight of inland public land,
water and other natural resources. Nunavut is still
negotiating devolution with the federal government.
Ph
Pho
hoto:
to: Ca
to
Cana
nad
dian
an T
an
To
ouri
urrriism Com
C mmis
miission
sio
iion
10
The business people we spoke with in Yukon find
the regulatory process “acceptable” and those in the
Northwest Territories are optimistic that devolution
will bring improvements and streamlining. That said,
in both of these territories, business people were
perplexed with the regulatory “mixed message” often
conveyed to the private sector; i.e., governments
saying they are “open for business” but bureaucratic
processes indicating anything but. “Territorial
governments seem to both support development in
one department and attempt to stymie the process in
another. Is there any way they could work together
to clarify the message? Clear messages about their
willingness to accept and support development would
be helpful,” said one Whitehorse business person.
Across the territories, business people felt, that
despite devolution of federal oversight (of most, if
not all sectors) to the territories, the biggest barrier to
effective regulation is the lack of “skin in the game”
for the government officials reviewing proposals from
business. “The livelihoods of these (governmentemployed) people don’t depend on mining or growth.
Ours do. We’ve flat-lined and will continue to do so
until we can get more people to come here and that
comes with more business,” said one Whitehorse
business person.
The business people we consulted in Iqaluit spoke
of the additional frustration of the impact of the
Nunavummi Nangminiqaqtunik Ikajuuti (NNI) Policy
which is to “maximize the participation of Nunavut,
Inuit and community-based (local) businesses in
Government of Nunavut contracting.”10 While none of
the business people have any issues with the intention
of the NNI Policy, all felt it is a severe barrier to
private sector-generated economic development and
perpetuates government control over business and
that its criteria is ineffective in achieving its objective
of improving the engagement of Nunavummiut in the
economy.
http://nni.gov.nu.ca/aboutnni Bids for Government of Nunavut contracts are assessed using a complex system of criteria including
Nunavut business status, Inuit firm status and local business status of the general contractor, subcontractors and suppliers, including the
labour component.
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
15
“Here, it is assumed that the basis of good business is who
owns it. In my view, what’s most important is what the
business does for the community. The government should
turn its focus away from ownership to asking, ‘Are you
training and employing residents of the territory? Are you
buying from Nunavut businesses? Are you supporting local
charities and the betterment of the community?’ That’s
what matters, not who owns you.”
—Iqaluit business person
A constructive relationship with
Aboriginal peoples
“Relationships with Aboriginal peoples are tremendously
important. This is a new world with Aboriginal influence
and power, likely much greater than ever in Canadian
history.”
—Yellowknife business person
Businesses in the territories—and throughout
Canada—know that productive relationships with
Aboriginal peoples are essential to their success. These
relationships can take on many forms, including
employer/employee(s), landowner/lease holder
and business partner. Perhaps most importantly,
Aboriginal peoples hold the social licence businesses
need for their projects to proceed.
“You can fight Aboriginal peoples or you can work with
them. While Aboriginal peoples don’t always have cash, they
have social licence. And that’s worth a lot.”
—Yellowknife business person
The Supreme Court’s 2014 decision granting title to
British Columbia’s Tsilhqot’in First Nation to more
than 1,700 square kilometres of land in B.C., based on
their traditional use, marked a turning point in the
relationship between Aboriginal peoples and private
sector project proponents. Before this landmark
decision, many businesses learned—sometimes the
hard way—that involving Aboriginal peoples from
the beginning of a project led to smoother sailing
and often resulted in obtaining extremely helpful
advice on the use of the lands and waters involved
in the development that saved projects time, money
and reputational damage. Moreover, added to this
complex relationship is the traditional distrust
between Aboriginal peoples and business.
“There is a legacy of mistrust between the Inuit and
business. The nature of capitalism is that business takes a
much as it can and gives as little as possible. However, there
is generational shift underway. The ‘us vs. them’ mentality
is shifting to ‘we’re all us.’ It’s nice to see and it’s changing
how business is done here.”
—Iqaluit business person
Business people across the territories see partnerships
with Aboriginal peoples as more than expedient;
they see them as desirable. This is because Aboriginal
peoples have not only land with the resources
businesses want, those with settled land claims and
economic development corporations have capital and
business acumen. The business people we spoke with
agreed that business, government and Aboriginal
peoples are “way past” looking at each other in silos,
but that the language in regulatory processes still
treats each as distinct groupings.
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
16
“You need to start changing language; it will affect
behaviour. We need to work together, whether or not there is
a settled land claim. If you keep going down the same road,
expecting different results, you are very foolish. Nearly
every part of this country will be subject to some kind of
indigenous land claim, so why not get in front of it? Involve
Aboriginal peoples in a meaningful way. There is no other
way to go.”
processes. However, issues may arise that individual
project proponents cannot address, including:

Concerns over past infringement of treaty or
Aboriginal rights

Accommodation measures that go beyond the
scope of a single project (e.g., wildlife recovery
and augmentation plans)

Regulations or legislation that infringe on treaty or
Aboriginal rights
Participants in—not roadblocks to—development

The scope and scale of consultation
Business people agreed on three things:

Revenue sharing between Aboriginal communities
and governments
—Yellowknife business person
1.
Aboriginal peoples do not (for the most part) want
to stop development; they want to participate in it
2.
Business, government and Aboriginal peoples
need to have a common agenda
3.
The role of government in the relationship
between businesses and Aboriginal peoples is
often unclear
“We’ve focused too long on our differences. The MacKenzie
Valley Fibre Link project is a perfect example of where
all the players came together to make something happen.
We need more of this model of collaboration so that all
communities—no matter what their size—can benefit from
this type of productive relationship.”
—Yellowknife business person
Territorial business people agreed that most of
them have very good relationships with Aboriginal
peoples that have resulted in very successful
ventures. Business people in Yukon and the
Northwest Territories said the biggest barriers to their
relationships with Aboriginal peoples are unsettled
land claims11 and the lack of government leadership in
developing some consistency in consultation processes
and Impact Benefit Agreements. Businesses would
appreciate a higher degree of certainty and structure,
currently missing in consultation processes, to reduce
the potential for conflict and litigation.
“Aboriginal consultation is a grey area, and we are hopeful
that the creation of such regulations under our MVRMA12
could help clarify and strengthen the relationship.”
—Yellowknife business person
Canadian governments have a duty to consult
Aboriginal peoples when proposed developments
have the potential to impact their constitutionallyprotected rights. Governments often delegate the
procedural aspects to industry as projects arise,
usually by incorporating consultation into the
environmental assessment or other regulatory
Business has a role to play as well
Territorial business people agreed that productive
relationships are not only affected by public policy,
but by how they conduct themselves.
11
The creation of Nunavut on April 1, 1999 was one of the outcomes of the Nunavut Land Claims Agreement.
12
The Mackenzie Valley Resource Management Act—which was updated when oversight over public lands, waters and inland natural
resources were devolved to the Government of the Northwest Territories on April 1, 2014—provides for an integrated system of land and
water management in the Mackenzie Valley.
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
17
“First Nations have a lot of decision-making power.
They’re landowners, and resource developers understand
that. They’re sensitive to (Aboriginal) rights and are
generally willing to work with whoever they need to have a
successful project. It takes time and effort to develop good
relationships. Businesses can interact with Aboriginal
community leaders more easily than can government (or so
it appears).”
There is also an understanding amongst chambers
of commerce in the territories that CanNor funding
is only available to NGOs as well as not-for-profit
organizations and not individual businesses. The
complex application process is seen to be a signal
that it is targeted only to those with the experience of
applying for funding; i.e., not small businesses.
—Whitehorse business person
Recommendations
The federal government should:
Recommendations

Instruct BDC and CanNor to work with private
sector banks and territorial chambers of commerce
to communicate where businesses—based on their
profile, history, why capital is required, etc.—
should look for financing

Ensure CanNor better communicates its business
funding programs to make it clear that individual
companies may apply for support
The federal government needs to:

Settle outstanding land claims

Communicate with the business (and broader)
community regularly the on status of unsettled
land claims by province/territory

Introduce clarity and consistency into the Duty to
Consult process and its role in it
Access to capital is important too
(especially for SMEs)
Photo: Government
Pho
nt of Yukkon
There is evidence of confusion in the territorial
business community—particularly within the
smallest of businesses—regarding where the
“lines of engagement start and stop” on access to
financing amongst private sector banks, the Business
Development Bank of Canada (BDC) and the
Canadian Northern Economic Development Agency
(CanNor). The three levels of institutions should
make it very clear to the business community who a
business person should approach for what level and
type of financing.
“A lot of what’s happening now is individuals in each
location are working with individuals in each organization.
However, organizationally, there isn’t a common
communication, and it would be a great idea to do this.”
—Yellowknife business person
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
18
The Long Game: Reducing the Dependency of
the Territories on the Federal Government
“The balance needs to shift in the percentage of GDP generated by government versus the private sector.”
“It’s unsustainable for government to keep growing and business to keep sinking.”
“The minute we can reduce the number of people employed by government in the territory to 50% or less, then we’ll
start to make real change about where this territory is moving economically.”
“A sustainable economy requires that the private sector makes at least a majority contribution to the GDP of the
territorial economy. That’s simply not happening.”
—Territorial business people
Business people across the territories agreed that the
only sustainable economic development is that driven
by the private sector. They also agreed that reducing
the size of government is not the answer as doing so
would have a catastrophic impact on the territorial
economies. The footprint of the private sector needs to
increase, they said.
Governments’ mindsets matter
“If there was a significant reduction in the amount of
transfers to Yukon from the federal government, it would
be a nightmare scenario. What we are saying is that it’s
unhealthy in the long-run that the federal transfer continues
to make up the bulk of the revenues to the Yukon territorial
government. We don’t want to send a shock wave through
the economy; however, there is plenty of room to increase the
contribution of the private sector.”
Business people feel the deep economic cushion
provided by federal transfers to the territories makes
governments and citizens complacent. In many
communities, the biggest business is government, and
the entrepreneurial spirit does not exist because it does
not need to. “People are very comfortable with the
status quo. I often feel that we’re beating a dead horse
because we don’t have popular support,” said one
Whitehorse business person.
—Whitehorse business person
While policy levers—as described previously—are
incredibly important to providing the tools to allow
business to do what it does best; i.e., create wealth,
business people across the territories agreed that the
federal and territorial governments’ thinking needs to
change.
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
19
Photo: Government of Yukon
One business person likened the federal transfers
to the territories to a “welfare cheque” with no
strings attached. There aren’t consequences, she said,
associated with poor performance and/or benefits
associated with strong performance. “That’s why the
royalties that have come with devolution are helpful;
they demonstrate the economic rewards of natural
resource extraction,” she said.
Across the territories, business people agreed that
private sector-driven economic development suffers
at the hands of federal and territorial bureaucrats
who do not have a business background and whose
compensation is not tied to how long it takes to review
and decide if and/or when projects will proceed at all.
“A quick ‘no’ is better than not knowing,” said one
business person.
“Is the door really open for business?” asked one
business person. “It’s a commonly-used expression,
but is it true?” Government is too focused on tactics
and “announceables” rather than strategies that focus
on desired results.
Business people said there is not a sense of urgency
within territorial governments—like there is in the
provinces—to assess private economic development
projects that create jobs and bring in tax revenues.
The importance of projects is not as significant to a
territory, they said, because of the relative weight of
the federal transfer to territorial revenues. “There’s
been a structure of dependency built that makes it
possible to take the ‘easy route’ with less risk than in
the provinces,” said one business person.
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
20
Governments need to have “skin in
the game”
There is a sense that governments do not have “any
skin in the game” and are getting bigger while the
private sector gets smaller. Officials’ compensation
does not depend upon the length of time it takes
to review a project proposal and whether or not
it proceeds. Governments are driven by a fiscal
year mentality that does not foster innovation.
Governments’ mentalities need to become
more focused on business cycles and recognize
that businesses cannot turn on a dime to meet
governments’ deadlines.
“There has to be an incentive for government not to be
an impediment and a penalty for doing so. Right now
government is incented to do a good job on social programs
and other responsibilities that don’t have financial
outcomes. But it is not incented in any way, shape or form
to act in the best economic overall interest of the territory.”
“When devolution happens, the territorial government will
be more in the driver’s seat than it is today. We have to be
very careful. If you have a government managing the high
budgets required to sustain a population of 33,000 people
over great distances, the private sector is going to have
to make a greater economic contribution. Otherwise, the
territory won’t be able to sustain itself. There is going to
have to be a major shift in the attitude of governments.”
—Iqaluit business person
Several business people said they feel that the
perspective that nothing is possible without the
government will only get worse and that the federal
government has to ensure measures to increase the
private sector’s footprint in Nunavut’s economy
are part of a devolution agreement. Otherwise, a
“devolved” Nunavut economy is doomed to fail.
Recommendations
The federal government should:
—Whitehorse business person

Establish service standards (for regulatory
reviews, etc.), that include benchmarks throughout
the process (acknowledging receipt and requesting
additional information) and impose consequences
(e.g., reduced or no performance bonus) if they are
not met without a valid explanation

Peg increases in the Territorial Funding Formula
for each territory to improvements in private
sector-generated GDP

Ensure measures to increase the private sector’s
footprint in Nunavut’s economy are included in a
devolution agreement
A cautionary tale for devolution in Nunavut
Business people in Nunavut feel the heavy hand of
government more than those in the other territories
because devolution of federal powers has yet to be
completed there and because of the obligations of the
Nunavut Land Claims Agreement, which include
those imposed by the Nunavummi Nangminiqaqtunik
Ikajuuti (NNI) Policy on territorial government
contracts.
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
21
Conclusion
The global economy—and Canada’s place in it—is
changing fast. When combined with the recession that
we have yet to recover from, Canadian businesses
have to be deft or risk their, their employees’ and their
communities’ futures.
Businesses in Canada’s territories are demonstrating
that they are willing to adapt to increase their
contribution to their economies and our national
competitiveness. The federal and territorial
governments must do the same. The status quo in
the territories—with growing governments and the
footprint of the private sector shrinking in relative
terms—is not sustainable. Canada is fighting for
its economic life against aggressive, agile foreign
competitors and needs all of its regions to contribute.
Failure to acknowledge—and more importantly
address—the challenges businesses in our territories
face risks them continuing the current cycle of
frustration and our entire country losing more
ground in its ability to compete. It is going to take the
collective power of every business in Canada to make
us as competitive as we need to be, to create great jobs
for young people, develop new technologies right
here at home and produce the wealth that pays for the
education, infrastructure, health care and the other
advantages we value as Canadians.
For more information, please contact:
Susanna Cluff-Clyburne | Director, Parliamentary Affairs | 613.238.4000 (225) | [email protected]
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
22
Roundtable Participants and Other Stakeholders
Name
Title
Organization
Darrell Beaulieu
President & Chief Executive Officer
Denendeh Investments
Kells Boland
Partner
PROLOG Canada Inc.
Cathie Bolstad
Executive Director
NWT Tourism
Dave Borud
President
Northern Windows and Doors
Mike Bradshaw
Executive Director
NWT Chamber of Commerce
Chris Buist
President
Norman Wells Chamber of Commerce
Franco Buscemi
General Manager
Uqsuq Corporation
Jennifer Byram
Vice President of Community Affairs
Pelly Construction Ltd.
Robert Cadigan
President & Chief Executive Officer
NOIA
Lesley Cabott
Board Member
Whitehorse Chamber of Commerce
Stephan Daigle
Regional Manager, Nunavut
Arctic Co-operatives
Emanuel DaRosa
President & Chief Executive Officer
NWT Power Corp.
Craig Ennis
Senior Communications Counsel
Atlantic Lottery Corp.
Joamie Eegeesiak
Community Development Officer
City of Iqaluit
Charlie Evalik
President
KITIKMEOT INUIT ASSOCIATION
Deneen Everett
Executive Director
Yellowknife Chamber of Commerce
Angela Fiebelkorn
President
Fort Simpson Chamber of Commerce
Janet-Marie Fizer
President
Hay River Chamber of Commerce
Paul Flaherty
President
Northwestel
Jeff Fowler
Regional Vice President, North of 60
RBC
Linay Freda
Regional Manager
Northern Properties
Brock Friesen
President & Chief Executive Officer
First Air
Kathy Gray
Publisher
Aboriginal Business Quarterly
Jen Hayward
Account Director
Outcrop Communications
Janie Hobart
President
Thebacha Chamber of Commerce
Kevin Hodgins
Senior Principal, Northern Operations
Stantec Consulting Ltd.
Tom Hoefer
Executive Director
NWT & Nunavut Chamber of Mines
Craig Hougen
President
Taku Sports Group
Lillian HvatumBrewster
Vice President, Community Relations &
Development
ATCO
John Jacobsen
President & Chief Executive Officer
Tower Group of Companies
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
23
Hilary Jones
General Manager
Mine Training Society
Rick Karp
President
Whitehorse Chamber of Commerce
Silas Kpolugbo
Director of Finance & Administration
Baffin Fisheries Training Coalition
Shawn Lester
President/Managing Partner
Iqaluit Chamber of Commerce/Lester
Landau
Stephen Lindley
Vice-President, Aboriginal & Northern
Affairs
SNC-Lavalin
Bright Lubansa
President
Inuvik Chamber of Commerce
Brian MacDonald
Chair
Dakwakada Development Corporation &
Yukon First Nations Chamber of
Commerce
John Main
Business Development Officer
KITIKMEOT INUIT ASSOCIATION
Chris May
President
Mid Arctic Technology Services
Sheldon Nimchuk
Project Manager
Qikiqtaaluk Corporation
Scott Northey
Director & Treasurer
KITIKMEOT INUIT ASSOCIATION
Cheryl O’Brien
Past-President
Watson Lake Chamber of Commerce
Benjamin Ryan
Financial Advisor
Air North
Mike Scott
General Manager
Northern News Services
Tammy Soanes-White
Senior Instructor, Business
Administration
Aurora College
Chris Sorg
Owner
Mac’s Fireweed Books
Ken Spencer
CEO
Coman Arctic
Rich Thompson
Director & Chief Executive Officer
Northern Vision Development
Corporation
David Thompson
President & Chief Executive Officer
Northern Cross (Yukon)
Ann Marie Tout
Senior Manager
Enbridge Pipelines (NW) Inc.
Peter Turner
President
Yukon Chamber of Commerce
Mark Walker
Vice President, Business Markets
Northwestel
Garth Wallbridge
Managing Director
Wallbridge Law Office
Chris West
Executive Director
Baffin Regional Chamber of Commerce
Jim Wilson
Branch Manager
RBC
Our National Competitiveness and Canada’s Territories | The Canadian Chamber of Commerce
24
This report was made possible by the
generous support of our sponsors
Diamond
Platinum