‘We’re not getting it’: Liberals sprinkle $700 million in Arctic but a strategic plan remains elusive

Dr. Jessica Shadian spoke to the Financial Post about the new budget from Ottawa and what the lack of a federal long term strategy means for building infrastructure in the Canadian North.

This is a repost of the original article which appeared on the Financial Post HERE.

Finance Minister Bill Morneau’s pre-election budget took steps to tackle the gaping infrastructure deficit in Canada’s north, but offered no timeline for when a highly anticipated long-term development strategy for the region will be complete.

In his last budget before the fall election, Morneau earmarked $700 million for Northern and Arctic initiatives, including $18 million for a hydroelectricity project in the Northwest Territories, $75 million for economic development programming and $400 million over eight years for infrastructure projects in the sparsely populated area.

Though Tuesday’s budget also reaffirmed Prime Minister Justin Trudeau’s 2016 commitment to co-develop an “Arctic and Northern Policy Framework” with local residents and stakeholders, it did not set a date for when it will be unveiled.

“There’s money sprinkled here and there but there’s no big strategy,” said Jessica Shadian, president of Arctic 360, an organization studying investment in the region. “Where does Canada want to see itself in 30 or 40 years and how does the Arctic fit into that?”

As Canada drags its feet, Russia, China and other nations are aggressively investing in the Arctic, making Ottawa’s need to decide on a plan and assert itself in the region more urgent, she added. The United States recently renewed its interest in the Arctic and is currently looking at strategies for how to regulate and draw revenue from maritime traffic, she noted.

“It’s obviously going to take far more than $700 million to build all the infrastructure needed in the North, from ports and roads to everything else,” she said. “If we’re going to pay for all of that, we likely need third party investment and that means participation from financial institutions. Those institutions need to make a business case and to do that, they want to see a long term strategy, a vision for the North.”

There is so much potential for the North to help Canada become globally competitive in a much greater way

Jessica Shadian, president of Arctic 360

Also missing from the government’s budget spending is a commitment to boost search and rescue capability in the North, said Hugh Stephens, executive fellow at the University of Calgary School of Public Policy.

Cruise ships and pleasure yachts are increasingly venturing into Arctic waters, including the Northwest Passage, placing new pressure on Canadian operations, researchers have warned. Since 2009, the number of ships sailing through federally monitored Arctic waters increased roughly 45 per cent from 86 ships in 2009 to 125 last year. Meanwhile, the number of voyages taken by those ships — measured by how many times a ship entered the monitored area — increased by 88 per cent during that same period.

The luxury cruise ship Crystal Serenity anchored just outside Nome, Alaska. The ship became the largest cruise ship to ever go through the Northwest Passage in 2016. Mark Thiessen/AP Photo

“This budget doesn’t strike me as much of a game changer for the North,” Stephens said. “But this government is already running a deficit and I suppose the question is where do you put your resources.”

Still, there was some good news for one industry.

Pierre Gratton, president of the Mining Association of Canada, said his expectations were set low, so a proposal in the 2019 budget to increase infrastructure spending in the north by expanding on a previous $400 million commitment to the region — announced as part of the National Trade Corridors Fund in 2017 – came as a “pleasant surprise” to the mining community.

“What’s been the problem for the North is that infrastructure allocation, historically, has been on a per capita basis, so the North gets peanuts,” Gratton said. ”And it’s been this perpetual problem.”

This budget doesn’t strike me as much of a game changer for the North

Hugh Stephens, executive fellow at the University of Calgary School of Public Policy

Indeed, for the mining industry, Canada’s often unexplored territorial north — which includes not only the Arctic but also the roadless northern hinterlands in many provinces — holds great potential. The area is estimated to contain 30 per cent of the world’s undiscovered natural gas and 13 per cent of its undiscovered oil, according to a 2008 U.S. Geological Survey. Others believe a retreat of sea ice could open new opportunities for resource shipping in Canada’s Arctic.

Yet the cost of working in the region is high: Gratton estimated it is six times more expensive to explore in northern areas because of the lack of infrastructure. A shortage of roads means exploration geologists must raise enough money for air travel, often on private planes, he said; and for companies developing projects, there is an additional layer of expense because roads or airstrips need to be constructed.

Also hindering local development is a lack of connectivity, said Gratton, who identifies digitization as a key to reducing operational costs.

“We have members in the North who don’t have broadband,” he said.

Prime Minister Justin Trudeau visits the Snow Castle on Yellowknife Bay in Yellowknife, Northwest Territories, on Friday, Feb. 10, 2017. Sean Kilpatrick/The Canadian Press

The 2019 budget sets aside $1.7 billion for a Universal Broadband Fund, beginning later this year, to bring high-speed Internet to difficult to reach communities, including those in the North. Another $18 million is committed to the Taitson hydroelectricity expansion project in the Northwest Territories to reduce the region’s heavy reliance on diesel fuel. Only eight of the Northwest Territories’ 33 communities are served by a hydroelectric facility, with the rest dependent on costly standalone diesel generation, according to government estimates.

An additional $75 million over five years will go toward the Canadian Northern Economic Development Agency to support initiatives including “foundational economic infrastructure” such as roads and visitor centres. Further funding is allocated to research and development, education and suicide prevention initiatives.

Given the size of the shortfall in the North, any long-term commitment to the region’s infrastructure is welcome, Shadian said. But to truly unlock the economic potential of the region, the federal government needs to set a long-term strategy, she said.

“When you look at other Arctic states and how they perceive and treat their north it just seems like we’re not getting it,” she said. “We look at the North as a welfare issue, it’s a cost and we don’t realize what a huge return on investment it could be. There is so much potential for the North to help Canada become globally competitive in a much greater way.”

Arctic spending breakdown:

  • $1 million over two years for a task force on post-secondary education in the North;

  • $26 million over five years to construct a science building at Yukon College;

  • $13 million over five years for the Dechinta Centre for Research and Learning in the Northwest Territories;

  • $15 million over five years for the Northern Isolated Communities Fund to support community-led local and Indigenous food production projects;

  • $50 million over ten years, with $5 million ongoing for the National Inuit Suicide Prevention Strategy;

  • $14 million over five years for digital health partnerships to address challenges common to both deep space and remote health care environment;

  • $400 million over eight years in additional funding for the National Trade Corridors Fund for northern and Arctic regions;

  • $18 million over three years to support planning related to the Talston Hydroelectric Expansion project in the Northwest Territories;

  • $75 million over five years for economic development programming, IDEANorth;

  • Up to $10 million over two years for the Polar Continental Shelf Program providing logistical support in the North;

  • $21.8 million over five years, with $68.5 million in remaining amortization, to upgrade infrastructure at the Eureka Weather Station in Nunavut;

  • $49.9 million over fifteen years ($2.2 billion on a cash basis) to create the Northern Abandoned Mine Reclamation Program;

  • $7.9 million over five years for work to strengthen our sovereignty over the continental shelf in the Arctic;

  • $34.1 million over five years, with $6.7 million ongoing, to support international engagement, including greater opportunities for Northerners and youth.

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