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baikal sedge and our resource royalties

Our member of Parliament, Ryan Leef, attracted national attention for one of his ideas last week. The National Post devoted an entire column to it. Leef's idea was a photo op for Prime Minister Stephen Harper riding an ATV in the Carcross Desert.

Our member of Parliament, Ryan Leef, attracted national attention for one of his ideas last week. The National Post devoted an entire column to it.

Leef’s idea was a photo op for Prime Minister Stephen Harper riding an ATV in the Carcross Desert. You can see why the prime minister’s office staff loved the idea. It showed the leader in a dynamic pose, bypassing what PMO staff think of as the “media elite” and appealing directly to “real Canadians.”

Unfortunately, the desert is also inhabited by sensitive and rare desert-dwelling plants which, according the Post, both Parks Canada and Environment Canada have been trying to save for years. I recently visited the desert and, ironically, there are lots of easy-to-read signs about Baikal sedge and the rare dune tachinid fly right where the PM would have had to park his limo. Baikal sedge is apparently found in only four locations in North America and was rated “threatened” in 2005 by the Committee on the Status of Endangered Wildlife in Canada, a scientific body linked to the Canadian Wildlife Service.

The 2005 report says “the species has been impacted by ... the recreational use of all-terrain vehicles” in the Carcross area.

Our MP, however, disagrees with the scientists. He told the Post he doesn’t consider the Carcross Desert to be one of the affected areas.

The Yukon government’s “Larger than Life” website encourages people to do the Carcross dunes hike, promising you will “discover rare plants such as the 10,000-year-old Baikal sedge.” Now it can be updated with “You may also see Canadian politicians pulling wheelies on top of Carex sabulosa!”

You have to wonder what “real Canadian” photo ops will come up during the next Harper visit. They’ll have to top ATVing on threatened species. Perhaps showcasing the army’s new machine guns by having the prime minister blast a few highway signs? Or maybe spicing up the fundraising barbecue by serving peregrine falcon with cranberry sauce? What about letting the PM press the “frack” button on a drill rig at the federal building parking lot at Third and Main?

But enough joking. The Carcross Desert brouhaha distracted everyone from the new revenue-sharing deal announced during the prime minister’s visit. It is very similar to the federal deal with the NWT announced last year. In fact, it is curious that it took more than a year for our Conservative MP and Yukon Party government to negotiate something with the federal Conservative government that Yellowknife, with its non-partisan territorial government and NDP member of Parliament, had already announced.

This delay may have cost the Yukon millions, since the Yukon government’s website tells us that the Yukon’s resource revenues were $4.7 million in 2010 and, with a $3-million cap in place under the old revenue-sharing deal, $1.7 million was deducted by the feds. We don’t know the figure for lost Yukon revenue for 2011 and 2012 year-to-date, but given the higher mining activity it could have been even bigger.

The new, NWT-style deal is much more generous. According to a federal backgrounder, the deal allows the Yukon to keep 50 per cent of resource revenues up to a cap of five per cent of our “gross expenditure base.” That’s a technical term in our transfer payment deal. It is around $850 million now, and rises over time based on various economic variables. The upshot is that the Yukon’s share could eventually reach over $40 million if as many mines open and are as profitable as many in the industry hope.

The Yukon also has an option, which it will take for now, to stay with a modified version of the old deal with a higher cap of $6 million. This makes sense since the new 50 per cent deal won’t pay out more until we have more than $12 million in total revenues.

The new deal is important. It means that Yukoners, via the Yukon government, have a much more direct financial stake in the success of Yukon mines. In a period when the federal government is cutting back, tens of millions in resource revenues would be significant money.

A big question is how this money will be shared with First Nations. The NWT government promised an automatic 25 per cent share for NWT aboriginal governments, but the Yukon government has not announced the same thing.

Everyone knows how lucrative the Minto mine has been for the Selkirk First Nation. The royalty cheque for 2009 was $5.9 million, for example, plus Minto paid $1.4 million to build an early childhood development centre in Pelly Crossing. Minto also supported a new water-treatment plant. The First Nation has also announced a one-time dividend of $15,000 for each citizen over the age of 21.

However, this is because Minto is in the unique situation of actually being on Category A settlement land. If the mine were a few kilometres away, merely in Selkirk’s traditional territory, the cash flows would be very different.

This is where the NWT’s promise to share 25 per cent of its resource royalties with aboriginal governments comes in. A similar deal here would significantly increase the financial benefits Yukon First Nations receive from mining projects across the Yukon, no matter what category of land they are on.

If it took the Yukon government over a year to match the NWT deal, we’ll now see how long it takes before they announce they’re sharing 25 per cent with First Nations too.

Keith Halliday is a Yukon economist and author of the Aurore of the Yukon series of historical children’s adventure novels.