4 Economic Challenges Facing the Government of Nunavut
Established in 1999, Nunavut is the largest and newest territory in Canada. There are approximately 37,000 residents in Nunavut living in 25 remote communities. Nunavut covers a land mass of 1,750,000 km2. It is the least populous and the largest in area of all of the provinces and territories of Canada. 84% of the population of Nunavut is Inuit.
There are no roads connecting the 25 communities in Nunavut and no roads connecting the territory to southern Canada. As such, Nunavut’s communities are only accessible by air or sea. Internet access in the territory is via satellite, resulting in high costs and limited bandwidth and limiting access for Nunavummiut (residents of Nunavut) to basic services like online banking, tax filing, etc.
Like most governments, the Government of Nunavut (GN) has to make choices to address pressing challenges with limited resources. However, there are additional challenges in Nunavut that are unique to the territory including the following four examples.
- Overcrowding in schools and low graduation rates. Nunavut has the fastest growing population in Canada, and a majority (52.1%) of the population is under the age of 20. The high number of youth has led to over-crowding in schools. The school board in Iqaluit, the capital of Nunavut, is looking for solutions to accommodate the growing number of students. There is a rising concern about the low graduation rate considering the territories’ high population of youth. According to these 10 Interesting Facts about Nunavut only 18% on Nunavut’s Inuit graduate high school, and only 11% attend post-secondary school.
- Major housing shortage. Overcrowding is becoming worse, and houses are not being build fast enough. According to an article published by APTN, The Government of Nunavut is scheduled to build 202 housing units over the next two years, in 16 of Nunavut’s communities. However, just to get caught up to the current wait list, it would be necessary to build 3,580 homes for 10,500 people. Nunavut is facing a time crunch, with the fastest growing and youngest population. Did you know most families already have three generations living under one roof? What happens when the next generation has kids, where will they live?
- High Food Costs. Food costs in the north can be up to 3 times the national average. There are several factors causing the massive price hike, including: the low Canadian dollar, environmental issues, and location. The only way to bring food into the territory is by air or via the annual sea lift. Here is a list of food price comparisons between Nunavut and the national average per food item.
- There is an alarmingly high suicide rate. 1 in every 9 teens have admitted to contemplating suicide and 1 in 20 have tried in this northern territory. According to an article from the Huffington Post, there are more than 1,000 attempted suicide calls each year in Nunavut. The suicide rate for Inuit is 11 times higher than the national average and the majority of deaths by suicide are people under 30 according to Statistics Canada.
It is important for the GN to have a capable and mature financial management function. Timely, reliable and relevant financial information is necessary to support decision making on competing priorities, including the challenges outlined above and supporting growth in Nunavut’s economy.
It is significant to note that over 90% of the GN’s revenues are from federal transfers – the economy in Nunavut is growing, but it is not big enough to support all of territory’s social needs. In February of 2017 the GN announced a $1.9B balanced budget for the 2017-2018 fiscal year, with a $2 million planned surplus. The new budget aims to tackle many of the economic issues facing the north including new spending on health and education.
How can the GN set a direction to strengthen its financial management? Stay tuned for a second installment about the Financial Management Capability Model and how it can be a useful tool for the GN.