If the gravy train grinds to a halt, then what?

Premier Darrell Pasloski has good reason to be miffed by news that Ottawa's annual shipment of loot may wind up $23 million less than expected next year. After all, it's a territorial election year.

Premier Darrell Pasloski has good reason to be miffed by news that Ottawa’s annual shipment of loot may wind up $23 million less than expected next year.

After all, it’s a territorial election year. And a tried-and-true re-election strategy is to rain as much money as possible upon the heads of residents and local contractors not long before the writ drops. This shortfall may mean that backhoes sit idle and potholes remain unfilled while Yukon Party politicians are knocking on doors, trying to tie up votes.

The reasons for Ottawa’s big cash shortfall are dreary to explain. Suffice to say that statisticians are involved, who monkeyed around with some data that was fed into a complicated algebraic formula that determines how much treasure is disgorged from Ottawa each year. It seems to be a case of the left hand of government not knowing what the right was doing, as the Finance Department, Statistics Canada and federal cabinet all insist there was no deliberate policy decision to reduce the growth of transfer payments to the territories.

Yet while Finance Minister Bill Morneau has promised to review the issue, he has hasn’t yet committed to rolling back the change. His government faces a big cash crunch of its own, after all.

Yukon’s Liberal MP, Larry Bagnell, faces the first big challenge of his term in trying to persuade his government to reverse course. Yukon Premier Darrell Pasloski, meanwhile, has lashed out at the federal government, accusing it of violating the principles of the deal that underpins our annual cash transfers – namely, that the payments are predictable and stable.

Let’s all hope that it escapes Morneau’s notice that the Yukon has lately received so much federal cash, our leaders sometimes haven’t known what to do with it.

To wit: it took eight long years of dithering for the Yukon to finally, in 2015, spend the last of the $17.5 million provided for “immediate action” to help build affordable housing, at a time when the territory’s capital struggled to deal with precisely this problem.

Or consider how our same territorial government apparently has enough spare cash on hand to entertain a grandiose scheme to twin the Alaska Highway past Whitehorse, in order to shave a few minutes off residents’ commute. Contrast this to the infrastructure deficit found in another territorial capital, Iqaluit, where for lack of a port supplies must be unloaded every ice-free summer on the nearby beach. If you were a federal minister, that’s the kind of discrepancy that may catch your attention.

Some wags have also noted that one-third of the Yukon’s transfer shortfall should already be covered through the unintended cancellation of the government’s plans to build a spiffy outdoor sports complex, given our government’s inability to sell the merits of the project to Whitehorse City Council, and cabinet’s ongoing refusal to answer sensible questions about it.

It’s worth remembering that even if Ottawa skimps on its hand-out to the Yukon, we’d still stand to receive $930 million next year, or $24,333 for every Yukoner. That’s an increase of a mere $7 million from last year, whereas the previous year saw transfers grow by $25 million. But consider how much transfers have grown well above inflation over the past decade: we received $576 million in 2007-8, or $17,728 for every Yukoner.

Don’t get us wrong: the year-over-year federally funded windfalls have been nice. But there’s no good reason to think we’ve been entitled to this money, or that it would continue forever.

The Yukon Party has always been good at insinuating that the handsome increases to our transfer payments had something to do with their own ingenuity. But, in reality, transfer growth has largely been driven by the spending of southern provincial governments. Alas, even if Ottawa decides to restore the more generous funding formula, this spending by provincial governments looks set to slow, with the crash in oil prices and predictions of weak economic growth.

So, what has our government done during the good times to prepare for the lean ones ahead? The good news is that our government has $146 million cash in the bank. But the Yukon Party has also saddled our Crown corporations with several hundred million in debt to help pay for new hospitals and power-generation facilities. That debt will have to be repaid in the decades to come.

And the fact remains that we continue to only raise a small fraction of our government’s revenue locally. This is, admittedly, not an easy problem to solve. The Yukon Party hoped that a flourishing mining industry would lead to greater financial independence, but now metal prices have collapsed and only one hard-rock mine continues to limp along here.

Some new ideas would help. But Pasloski has all but admitted he is out of them, with his remarks during the last legislative sitting that not much more needs to be accomplished at this point in his government’s mandate. Whether Yukon’s opposition parties are able to come up with some good ideas of their own during the lead-up to the territorial election is one of the big questions for 2016.

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