Nunavut is the greatest Canadian experiment, according to the Professor Robert Huebert of the University of Calgary. It is a territory in need of investment, without the political power and mechanisms to make that happen. But there is hope, and that hope lies in resource extraction.
Last Friday a group of 17 Action Canada fellows facilitated a dialogue about the development of public policy for northern Canada based on lessons from its history. The dialogue included 3 presentations:
- Unlocking Nunavut’s Economic Potential: Public & Private Financing for Transportation Infrastructure’s Development
- Country Food: Improving Food Security in Nunavut through Better Access to Country Food
- Growing the Golden Egg: The Question of Non-renewable Resource Revenues and the Future Prosperity of Canada’s North
Underlying the dialogue was an assumption that resource extraction was necessary and beneficial not only to Canada’s North but to Canada’s national economy as well. The first panel stressed the astronomical costs of the transportation infrastructure needed to facilitate extraction, as well as the vast potential wealth hidden under Nunavut’s ice and waters. A lack of roads, seaports, docks and airports capable of handling large cargo have stunted development in the North, according to Colonel Pierre LeBlanc. The cost of transporting construction materials and gasoline play a role, as, for example, a 140 km stretch of gravel road was recently built in Nunavut at a cost of $300 million. To put that number in perspective, Nunavut received roughly $1.4 billion in transfer payments in 2013-2014.
Nunavut sits on massive iron-ore concentrations, and potentially one of the largest oil deposits in the world in the Davis Strait between Canada and Greenland. Yet the assumption that resource extraction is Nunavut’s only salvation was juxtaposed with stories of foreign drilling and mining exploration companies given permits in Greenland to extract resources using their own imported labour force, while contributing minimal royalties and taxes to the local economy. There was also a worry among participants about where the financial benefits of extraction would go. Local communities? The federal government? Would any financial benefits be negated by reduced transfer payments from the feds? Adding to this, demand for these resources depend on foreign markets. Public infrastructure investment in resources would have to be substantial and therefore very risky, as a smart investment one day could become a catastrophic waste of public money the next.
Solutions were few. A number of pension fund representatives were in the room were told that investment in the mining industry would benefit the North and provide high returns, but that these investments would certainly be high-risk. The only solution that offered hope in my mind was the possibility of a well-managed Heritage Fund, which leads into the discussion in the third panel, which I will cover in Part 3.
Overall, there was a great discussion and I learned a great deal about Nunavut’s past and present.
Interesting tidbit: Norwegian Hell’s Angels have been using Canadian charts to sail through the Northwest Passage. Several have already been deported.