May 2006

The Honourable James M. Flaherty, p. C., M.P.
Minister of Finance
House of Commons
Ottawa, Ontario

Dear Minister,

We are pleased to provide the report and recommendations of the Expert Panel established to review Territorial Formula Financing (TFF).

For the past year, Panel members have listened to the views of territorial governments and people in the North. We have learned about the unique challenges and circumstances in the territories and their aspirations for self-sufficiency. Clearly, Territorial Formula Financing is critical for the territories and, while there is tremendous potential for economic development in the North, TFF will remain an essential program for the territories for years to come.

We have analyzed a wide range of ideas and options for Territorial Formula Financing, explored alternatives and assessed the impact. We believe that the package of recommendations outlined in our report will provide a significant improvement over the current arrangements and establish a solid new approach for the future of Territorial Formula Financing.

We would like to thank the territorial governments, federal government officials, and a host of people in the North who contributed to our review. We hope our report reflects the aspirations and expectations of people in the territories and most important, that it helps secure a stronger future for the territories.

Yours sincerely,

Al O’Brien (Chair) Fellow, Institute of Public Economics, University of Alberta	Fred Gorbet Principal, Strategy Solutions	Robert Lacroix Founding member, Centre for Interuniversity Research and Analysis on Organization (CIRANO)
Elizabeth Parr-Johnston Principal, Parr Johnston Economic and Policy Consultants	Mike Percy Dean, School of Business, University of Alberta

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