Yukon Senator Dan Lang is calling on the federal government to fully restore transfer payments to the three territories, and says it’s unfair that the provinces haven’t seen similar cuts.
He said that if the $6.5-million shortfall the Yukon faces isn’t remedied, the government will have to look at spending cutbacks or increased taxes.
“I don’t think it was done properly, and I don’t think it’s fair,” he said.
Lang calculates that the three territories will see a total shortfall of more than $100 million over the next five years, based on annual shortfalls of $6.5 million to the Yukon, $10 million to the Northwest Territories and $8 million to Nunavut.
He said he thinks that’s particularly unfair, given that Canada has been “transferring significant amounts of money, like billions of dollars, internationally.”
He said the Trudeau government spent $5 billion outside the country in its first three months in office, on humanitarian aid, climate change and immigration.
“Why would we cut back the North when we have our own problems here?” he said.
The Yukon was expecting to receive $953 million in total transfer payments in 2016-17, up from $923 million this fiscal year. In December, it was revealed that methodological changes at Statistics Canada would result in a $23-million shortfall, meaning the Yukon would only have received $930 million.
Last month, the federal government announced it will make legislative amendments to restore $16.5 million of that shortfall. The Yukon will now receive about $947 million, an increase of $24 million over this year’s transfer. Still,
Lang said the provinces’ transfer payments have been fully restored, which suggests the territories haven’t received fair treatment.
“You haven’t heard anybody cutting back the government of Quebec, their transfer, and it’s billions,” he said. “You haven’t heard anybody cutting back Ontario – that’s billions.”
Tim Shoniker, director of fiscal relations for the Yukon Department of Finance, said it’s true the provinces haven’t been affected the same way the territories have.
He said equalization payments to the provinces would have been affected by the Statistics Canada methodology changes. But the government decided to use the old methodologies to calculate equalization payments, so they were fully restored for the 2016-17 year.
But the territorial transfer payments are a bit more complicated. He said those calculations use an extra variable that isn’t used for equalization payments to the provinces. That’s the variable responsible for the shortfall the territories are now facing.
Still, Shoniker said Finance Canada could have chosen to fully restore the territorial transfer payments.
“They never told us why they partially did it,” he said.
A request for an explanation from Finance Canada went unanswered by deadline.
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