The Yukon’s economy is the fastest growing in the country.
But the industry driving the growth is the territory’s decades-old standby: government.
That has opened the Yukon Party government to criticism that the good times are absent in Yukon communities, and Ottawa could nix the prosperity at any time.
“It hasn’t been spreading evenly across the territory,” said Liberal leader Arthur Mitchell.
A recent Statistics Canada study found the territory’s gross domestic product climbed by 5.2 per cent in 2005. The national average was 2.9 per cent.
Government spending is driving the increases, said the report.
“In the Yukon, government expenditures account for almost half the territorial GDP,” reads the Statistics Canada study of provincial and territorial economic accounts, released last Wednesday.
Government is the dominant player in the territory’s economy, said Pat O’Hagan, assistant director for Statistics Canada’s income expenditure accounts branch in Ottawa.
“Fact is, it does account for close to 50 per cent, on average, for economic growth,” he said.
Over the past two years, government-spending increases in the Yukon have been “quite significant,” said O’Hagan.
But there is strong growth in the private sector, he said.
Those increases include spikes in housing prices, business investments in machinery and rising personal-spending rates, he said.
Government spending and staffing levels have reached all-time highs at the same time the Yukon’s GDP growth leads the country.
But that government spending is spurring the GDP growth, said Premier Dennis Fentie.
According to the Yukon’s public accounts for 2005-2006, government expenditure increased from a former historic high of $654 million in 2005 to $668 million in 2006, an increase of about two per cent.
As of June 2006, there were 5,661 people employed by all levels of government — excluding First Nations — according to research from the Yukon bureau of statistics.
That number, the highest ever recorded by the stats branch, is up three per cent over June 2005, according to the bureau’s monthly review for September 2006.
Public-sector employment has grown by about 3.5 per cent since January 2004, said Gary Brown with the bureau.
The percentage of the labour force that works in the public sector appears to be holding steady in the Yukon, at about 30 per cent, he said.
But those numbers don’t include people employed in education and health care, he added.
An economy dependent on government spending contains pitfalls — even if it’s outpacing other provinces and territories, said Mitchell.
One is the emergence of Whitehorse as an economic powerhouse while small Yukon communities struggle.
“Obviously we have a capital city, so there’s going to be a concentration here, but I am worried we’re getting dual economies: Whitehorse, and the rest of Yukon,” he said.
Population numbers are rising in communities close to Whitehorse, but falling pretty much everywhere else, he said.
“In travelling around the territory this summer, I didn’t see the signs of an economic boom in Ross River, very few in Carmacks, not a whole lot in Mayo and Dawson is still struggling with disappointing tourism figures,” he said.
Becoming overly reliant on federal transfer payments is also dangerous because the tap could be shut off, said Mitchell.
But he doesn’t see that happening any time soon, he conceded.
And it appears that the Yukon government will go on spending its swelling federal windfall.
Staffing increases are happening at even the highest levels of government.
With eight ministers, Fentie’s government has the largest cabinet ever, despite the Yukon Party winning two fewer seats than it did in 2002.
According to sources, nobody in the Yukon Party’s inner circle that once staffed a government of 12 MLAs has been let go now that there are only 10.
In fact, staff numbers are growing.
Archie Lang, minister of four portfolios — Energy, Mines and Resources, Highways and Public Works, the Yukon Development Corporation and the Yukon Energy Corporation — will now have two executive assistants, said Rick Neilsen, chief of staff for the Fentie administration.
Lang has a “significant workload” and requires the added help, said Neilsen recently.
“We are revisiting structure to accommodate the wishes of the premier and his elected colleagues, in terms of how we best provide services,” said Neilsen.
No cabinet member had more than one executive assistant in the last Yukon Party administration.
But Fentie is proud of the spending and staffing increases because they are spurring private-sector growth, he said.
“Our government said that the first thing we were going to do is use our budgets as an economic tool,” said Fentie.
“Increasing stimulus means investment into the territory through government budgets, and it’s working, considering the complimentary investment that’s coming in now from the private sector.”
Fentie pointed to mining developments and commercial and residential building booms that have occurred during the rapid expansion in government spending and staffing.
“There’s a lot of positives in the Yukon, and the facts are, we have one of the fastest growing economies in the country, and I’m very proud of that,” he said.
“Yes, government has grown, but it’s not only YTG; it’s First Nations — that’s significant growth when two First Nations become self-governing.
“We’re always going to be looking to recruit and retain more individuals because it is fundamental to the future of Yukon,” he said.
Fentie’s rhetoric is misleading, said Mitchell.
“After getting elected in 2002 and saying the previous budgets were unsustainable, he then went on to increase the budget,” he said.
“He’s moved to saying he’s trying to stimulate the economy by spending — so far, it’s largely government spending,” said Mitchell.
“I’d like to see economic diversification: genuine, sustainable economic development, that’s community based.”