Bagnell hopes for solution to transfer payment shortfall

Yukon MP Larry Bagnell says he's been "strongly encouraging" federal Finance Minister Bill Morneau to find a solution to the expected transfer payment shortfall in 2016.

Yukon MP Larry Bagnell says he’s been “strongly encouraging” federal Finance Minister Bill Morneau to find a solution to the expected transfer payment shortfall in 2016.

Last week, Premier Darrell Pasloski announced that an unexpected methodology change means the Yukon will receive $23 million less than expected in transfer payments from the federal government next year.

Echoing Pasloski’s comments last week, Bagnell said the change “does affect the predictability of our transfer payment.”

“I am inspired by the fact that the federal minister of finance asked his officials to work with Yukon government officials to see if they could come up with a solution,” he said.

Bagnell stressed that the change came from Statistics Canada, not from Finance Canada. He said Morneau found out about the change around the same time the Yukon government did.

“It wasn’t our government or the previous government,” he said. “Periodically, the stats department reviews the way they collect various stats, and this was a normal review.”

A Finance Canada spokesperson confirmed in an email to the News that the government has taken “no action” to cut transfer payments, and relies on data from Statistics Canada when making its calculations.

“The Minister of Finance appreciates the impact that this revision is having and has asked federal officials to work with their territorial colleagues on options to address these concerns,” he wrote.

According to Statistics Canada, the change stems from a three-year project to align Canada’s calculation of economic accounts with international standards. The project included the use of “higher quality and more detailed estimates of government revenues, expenses, assets and liabilities,” a Statistics Canada spokesperson told the News in an email.

On Nov. 10, Statistics Canada released revised economic accounts for all the provinces and territories from 1981 to 2014, based on that review.

That revised data were entered into the formula that Finance Canada uses to calculate the transfer payments, which resulted in the sudden $23-million shortfall.

Regardless of why the change was made, Yukon Chamber of Commerce chair Rich Thompson said it shows the Yukon needs to strengthen its private sector and reduce its dependence on federal funds.

“The less important the government is to the economy, the better off we are, because the less subject we are to arbitrary changes.”

Thompson said the Yukon’s private sector has such a small impact on the overall economy that it tends to get ignored.

“I think people do recognize that it isn’t all that important at this point in time. But the flaw in that is that it’ll just keep it that way.”

He said he’s hopeful that new mines will open soon and boost the local economy. He also said the government should focus on reducing the amount of “red tape” facing private-sector projects.

Yukon’s private sector has certainly suffered this year. Finance officials are expecting a $15-million shortfall in corporate and personal income tax revenue this fiscal year, relative to what was expected when the spring budget was tabled.

With the change in methodology, the Yukon is expected to receive $930 million in federal payments in 2016-17, up from $923 million this fiscal year.

The Yukon government had been expecting to receive $953 million.

Contact Maura Forrest at

maura.forrest@yukon-news.com

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