Federal infrastructure money could push Yukon into deficit spending, Dixon says

Community Services Minister Currie Dixon says the Yukon needs to be careful when it comes to spending new federal infrastructure dollars.

Community Services Minister Currie Dixon says the Yukon needs to be careful when it comes to spending new federal infrastructure dollars.

Dixon said new federal funding could drive the Yukon into deficit spending, because of a requirement that the territory pay for 25 per cent of new infrastructure projects.

“Just because all this infrastructure money is available doesn’t mean it’s all for free,” he said. “We have to pay to play.”

The new federal Liberal government campaigned on a massive $60-billion infrastructure budget. The first phase of that funding is now being rolled out, with $11.9 billion to be spent in the next five years on public transit and green and social infrastructure.

Some of that money is being doled out through a new Clean Water and Wastewater Fund, which includes $51 million for projects in the Yukon.

That’s on top of $251 million in federal funds earmarked for the Yukon over 10 years as part of the New Building Canada Fund, which finances a wide range of infrastructure developments.

But both of those funds require the Yukon to pay for 25 per cent of all new projects. That means the Yukon’s contribution to the New Building Canada Fund would be about $90 million, for a total of $342 million. The Yukon would also have to contribute a total of $17 million for clean water and wastewater projects.

Dixon said Yukon’s Department of Community Services typically spends between $25 and $35 million each year on infrastructure. But with this new money available, that amount could shoot up.

“That puts pressure on our financial resources to do that,” he said.

Dixon said the federal government has also promised to create other funds, including a $500-million pot for improving broadband service in rural and remote communities. But it’s still unclear what conditions will be attached to that money, he said.

“There are questions about this infrastructure funding that aren’t answered yet.”

The Yukon absolutely needs new infrastructure dollars, Dixon said, but he wants to see that money spent responsibly.

“I’m not saying that this year we’re going to leave money on the table,” he said. But he didn’t rule that out as a possibility in the future. He emphasized that the Yukon government does not want to have net debt.

Still, Yukon and the other territories actually contribute less to infrastructure development than the provinces. Dixon explained that in southern Canada, federal, provincial and municipal governments each pay for one third of infrastructure projects.

But the North negotiated a special 75/25 agreement with Ottawa when the original Building Canada Fund was created in 2008, because it was deemed unfair for such small populations to contribute such a large portion of the costs.

The Yukon government has also known how much federal money would be available through the New Building Canada Fund since 2014.

During question period on Monday, Liberal Leader Sandy Silver accused the government of giving out mixed messages on infrastructure. He pointed to the Northern Premiers’ Forum in Old Crow last month, where Premier Darrell Pasloski stressed the need for more federal support.

Silver told the News that if the Yukon government wanted to be fiscally prudent, it would avoid spending so much money on “shiny projects” like the new F.H. Collins school and the $147-million continuing care facility in Whistle Bend.

The Yukon also recently applied for federal funding for a massive project to build roads that would serve the Coffee, Casino and Selwyn mine sites. The Yukon’s contribution to that project would be about $112 million.

Silver said the government needs a better plan for managing infrastructure funding over the long term.

“If there’s an opportunity with the federal government for increased money for infrastructure … it would seem to me a really smart thing to see how we can maximize that money,” he said.

But Silver wouldn’t say whether he would prefer to take on more debt and spend all the money or leave federal infrastructure dollars on the table, if it came to that.

“We’re not ready to go into platform mode,” was all he would say.

In the legislative assembly on Monday, Dixon couldn’t resist a few jabs at the federal Liberals’ economic track record, pointing to the Trudeau government’s projected $30-billion deficit.

“They have shown no hesitancy about getting into debt and then going into deficit,” he said. “We are a little more concerned about that and we want to ensure that we manage our money wisely here in the territory.”

Correction

The original version of this story stated that the Yukon government typically spends between $25 and $35 million each year on infrastructure. But that figure refers only to the Department of Community Services, Minister Currie Dixon later clarified. He said the Yukon government as a whole spends much more than $35 million on infrastructure annually.

Contact Maura Forrest at

maura.forrest@yukon-news.com

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