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In its mandate, the Panel was asked to identify indicators of the cost of providing public services in the territories that would be relevant to evaluating Territorial Formula Financing (TFF) funding levels. As indicated in the Panel’s Report, the benchmark Gross Expenditure Bases (GEBs) established in 1985 in Yukon and the Northwest Territories reflected the reality that expenditure needs were high in the two Territories. This was also taken into account in the establishment of Nunavut’s GEB beginning in 1999-00. TFF grants to the territories continue to be substantially higher per capita than Equalization payments to receiving provinces in recognition that expenditure needs are much higher in the territories compared with the provinces. In spite of this, during their consultation process, the Panel heard from the three territories and other commentators that the key issue for the territories remains the overall adequacy of TFF funding to meet expenditure needs.
In view of these concerns, the Panel reviewed evidence of expenditure need (volume and costs) in the three territories compared with Canadian averages and selected indicators of health and social well-being in the territories. In the Panel’s view, there is sufficient evidence of higher than average expenditure needs to warrant the increase in TFF funding recommended by rebasing the GEBs. However, in the Panel’s view, expenditure needs in Nunavut are substantially different than in the other two territories.
This annex summarizes issues related to expenditure needs and includes a review of a number of potential indicators of expenditure needs that may be relevant to evaluate TFF funding levels in future.
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