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The situation in the three territories is vastly different from southern Canada, and there are significant differences even among the three territories. For people living in downtown Toronto, Vancouver, Montréal or Calgary, it’s difficult to imagine a vast expanse of land roughly half the size of Canada and inhabited by just over 100,000 people, many of them located in small, remote communities accessible only by air, water, or ice roads in the winter.
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| While most provinces face challenges in delivering public services to people in smaller communities, those challenges pale in comparison with those in the territories. |
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While most provinces face challenges in delivering public services to people in smaller communities, those challenges pale in comparison with those in the territories. The following facts and trends provide a snapshot of life in Canada’s North and underscore why costs for providing public services are so much higher than in the rest of Canada.
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“The North is a frontier, but it is a homeland too, the homeland of the Dene, Inuit and Métis, as it is also the home of the white people who live there. And it is a heritage, a unique environment that we are called upon to preserve for all Canadians.”
- Mr. Justice Thomas R. Berger7 |
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The population in the three territories is small in comparison with the rest of Canada. The latest information for 2004 shows a combined population of just under 104,000 people. In Nunavut, 85 percent of the population is Inuit compared with 50 percent Aboriginal people in the Northwest Territories and 20 percent in Yukon. Across Canada, Aboriginal people comprise only about three percent of the population.8
Looking ahead, the population of all three territories is expected to grow at a higher rate than the rest of Canada. By far, the largest increase will occur in Nunavut, where the population is expected to grow by 26 percent from 2004 to 2019.9
Because people in the territories are spread out over vast distances, frequently in small remote communities with few, if any, transportation links, the territories face unique challenges in providing education, health, social services, and infrastructure to their residents. Economies of scale are virtually impossible. Unlike communities in southern Canada, where children can be bussed to school or people can drive to the nearest hospital, those options simply are not possible in most parts of the territories.
Not surprisingly, these factors drive costs substantially higher for delivering public services in the territories.
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| All provinces face challenges in containing increasing costs and demand for health care. But in the territories, it’s doubly challenging because of much higher needs, shortages of health care providers, lack of full-service medical care, and medical transportation costs. |
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All provinces face challenges in containing increasing costs and demand for health care. But in the territories, it’s doubly challenging because of much higher needs, shortages of health care providers, lack of full-service medical care, and medical transportation costs. On top of that, health status, especially in Nunavut, is much worse than anywhere else in Canada.
In spite of significantly higher spending in the territories compared with the rest of Canada, indicators of health status in the territories show lower life expectancies, higher infant mortality rates, significantly more years of life lost due to unintentional injuries, higher rates of death from lung cancer, and fewer people who rate their own health as good or excellent.10
The situation in Nunavut is particularly disturbing. Compared with the rest of Canada:
- Life expectancy is 10 percent lower
- The rate of infant mortality is three times higher
- Thirty-eight percent more infants are born with a low birth weight
- Tuberculosis rates are 18 times higher
- Suicide rates are 10 times higher
- Smoking rates are three times higher for youth and twice as high for adults11
Compared with the rest of Canada, the territories have higher rates of single-parent families, higher average unemployment rates (except for the Northwest Territories), substantially higher suicide rates, and higher rates of violence and property crimes. Again, the situation in Nunavut is much more serious than in the other two territories.
High school graduation rates are improving in all three territories, including rates for Aboriginal and Inuit students. In the Northwest Territories and Yukon, the rates are comparable with the rest of Canada, but high school graduation rates in Nunavut are the lowest in Canada. About one of out every three students doesn’t finish high school in Nunavut.
At the Panel’s Roundtable in Yellowknife, deficiencies in education and training were seen as a major obstacle to social and economic development and a particularly difficult barrier for Aboriginal and Inuit people.
All three territories face particular challenges in providing adequate and affordable housing. A significant proportion of the current supply of housing is in need of repairs and the costs of construction, maintenance, serviced land, shipping, and labour are substantially higher than in southern Canada. The situation in Nunavut is particularly serious. More than half of the people in Nunavut live in public housing and the current supply is not adequate to meet expected population growth. The result is overcrowding, with much higher than average numbers of people living in the same home. This contributes directly to significant social, education, and health problems.
In addition to the need for housing, the existing infrastructure of roads, airports, water, sewer, and waste disposal is aging. Costs for repairs and replacements are substantial. While provinces face similar challenges with replacing an aging infrastructure, the challenge for the territories is compounded by higher costs and less fiscal capacity to raise the necessary funds.
As noted earlier, all three territories are heavily dependent on TFF and other federal transfers to support essential public services and investments in infrastructure.
While all three territories are striving to increase economic activity and expand their own sources of revenues, primarily through income taxes, the reality is that even substantial economic developments don’t necessarily result in significantly higher revenues for the territories under the current arrangements. In many cases, businesses involved in developments in the territories are based outside the territories and pay their taxes in other jurisdictions. The same is true for a transitory workforce that comes to the territories for jobs, but lives permanently and pays taxes in southern Canada.
One of the most promising opportunities for the territories is the potential for and continued development of their rich natural resources, particularly oil, gas and diamonds. Constitutionally, however, the authority for natural resource development and management in the three territories lies with the federal government. This includes the right to set, administer, and collect royalties from resources. Under existing arrangements, the federal government benefits significantly from resource development in the territories, much more than the territorial governments and other interests.
Since the 1980s, the Government of Canada has been pursuing a policy of devolution in which the authority for setting, administering, and collecting resource revenues and managing resource development would be transferred to the territories through agreements and legislation. In September 1988, an agreement in principle was reached with Yukon and the Northwest Territories setting out the parameters for transferring authority for oil and gas. Under this agreement, oil and gas revenues (except those under Aboriginal Land Claims) were to be for the use and benefit of territorial governments. The territories would receive a net fiscal benefit in order to provide an incentive to increase resource development. If the revenues reached a particularly high level, the federal government would retain an increasing proportion of the incremental revenues.
Since then, only the Government of Yukon and some Yukon First Nations have reached agreements with the federal government on devolution and resource revenue sharing. Discussions are ongoing with the Government of the Northwest Territories and the Aboriginal Summit. Talks with the Government of Nunavut are in the preliminary stages.
As noted earlier, a large percentage of the population of the territories is made up of Aboriginal and Inuit people. Across the three territories, there are different fiscal arrangements and self-government agreements in place among the federal government, the territorial governments, Inuit organizations, First Nations, and Aboriginal organizations. The majority of the financial arrangements include sharing revenues (including resource revenues) among the First Nations, Aboriginal governments and organizations, and the territorial and federal governments. These arrangements can also have an impact on TFF and certainly on the overall level of federal transfers to territorial governments.
- Costs are substantially higher in the territories primarily because of geographic dispersion, isolation, and costly transportation.
- All three territories rely heavily on TFF and other federal transfers to pay for essential public services.
- A number of indicators point to serious social problems combined with inadequate housing, lower health and education outcomes, and an urgent need to replace and expand existing infrastructure.
- Although there are problems in all three territories, the situation in Nunavut is particularly serious and troubling.
- Issues related to devolution and resource revenue sharing with the territorial governments, Aboriginal governments and organizations, and Inuit organizations are complex and will take time to resolve.
- While there is great potential for economic development from natural resources in the territories, investment is needed, and the overall benefits to the three territories will not be realized in the short term.
- Their determination to become self-reliant is an important priority for the territories and for Canada. Changes to TFF should contribute to this goal. However, for the foreseeable future, TFF will continue to be a significant source of funding for all three territories.
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