Nunavut’s economy will see very high growth in coming years, says GN economist

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The territory’s immediate economic forecast is looking good, with very high growth in the next four years, though it must overcome challenges in the longer term, such as graduating more students from high school and finalizing a land-use plan.

This is according to the Government of Nunavut’s senior economist Francois Picotte, who spoke at the Nunavut Mining Symposium April 3.

The Government of Nunavut’s senior economist Francois Picotte, pictured here, says the territory will see very high growth in the next four years, while Bank of Canada governor Stephen Poloz says there’s no reason to be gloomy about the territory’s prospects as it demonstrates every sign of an up-and-coming economy. photo courtesy Michel Albert/Nunavut Mining Symposium

In 2019, investment in the mining sector is expected to reach roughly $1.4 billion, slightly lower than in 2018. But Picotte says that’s likely to grow by roughly half a billion each year for the next few years.

At the moment, the government is the largest contributor to the gross domestic product, which translates into all the good things in life – jobs, food, and health, said Picotte. The Government of Nunavut recently announced spending is estimated to be $2.166 billion this fiscal year.

Looking to 2022, “we have mining trading places with government in terms of the weight that it has in the economy,” said Picotte.

Currently the government is the largest contributor to the territory’s gross domestic product, however senior economist for the GN Francois Picotte projects the mining sector, once production at mines is in full swing, will outpace the government.
Michele LeTourneau/NNSL photo

“It’s pretty much a straight-line growth for the next four years, mostly predicated on (mine) production increasing.”

Bank of Canada governor Stephen Poloz, who kicked off the symposium April 1 with a talk about the challenges faced by the Canadian economy, holds a similar view on the territory’s economy. Responding to the bleak description of Nunavut’s economy by Iqaluit businessman Stuart Kennedy, Poloz said Nunavut’s economy is one of a young economy, calling Kennedy “altogether too gloomy”.

“I say young in an economist’s measure of time. When a young economy starts off they have natural resources and they have people, and it will always seem to them they’re getting most of their stuff from somebody else. But it’s all money being generated. Through transfers, which, of course, is part of the system, and also through real production, which is growing,” said Poloz.

“My staff estimates up to a nine per cent growth rate for the economy this year. That’s pretty spectacular stuff. That’s not some fiction, that’s real. And those things are things that are being exported. Every ingot of gold that goes out is an export, so is every load of iron ore. That generates real money. And every service that an engineering firm performs or every time a tourist comes in and goes out on a dog sled ride or stays in a hotel, that’s you exporting your scenery, the quality of life, the great food – it’s real business.”

Poloz said another measurement is inflation, and at three per cent or more, Nunavut’s is almost double Canada’s.

“We’re all in the same Canadian dollar area and that is symptomatic of the fastest growing part of that collective we know as Canada,” he said.

In fact, in his presentation, Picotte noted Nunavut’s import/export ratio is better than ever, and will continue to improve as mine production rises. In 2008, for every dollar made on exports, $10.6 was spent on imports. In 2017, for every dollar made, $1.9 was spent. As mining production increases, that ratio will balance out.

GN senior economist Francois Picotte noted Nunavut’s import/export ratio is better than ever, and will continue to improve as mine production rises. In 2008, for every dollar made on exports, $10.6 was spent on imports. In 2017, for every dollar made, $1.9 was spent. As mining production increases, that ratio will balance out.
Michele LeTourneau/NNSL photo

Nunavummiut must be educated and trained

Picotte said that while employment is at an all-time high in Nunavut, the fact remains many jobs are occupied by people from outside the territory – “available to Nunavummiut but Nunavummiut are not trained, yet.”

“But employability is on the rise. We like to think this will change, or things are getting a bit better to some extent. That starts with being able to graduate more people from high school,” said Picotte.

When Nunavut became a territory, graduation rates were low.

“We’re talking about education. We’re talking about employability. More graduates is a positive thing for the long term. If we can keep increasing, and even if we don’t, just the fact that we’re at 48 per cent is amazing improvement from where we were before. We were at about 20 to 30 per cent (in 2000). At 48 (per cent), that means a lot more people entering the job market with more ease,” said Picotte.

He called secondary education the lowest hanging fruit to generate economic development.

“There’s no cost to this fruit. The education is already paid. The seat of the student who doesn’t go to school, who doesn’t graduate is already paid for,” he said.

“The teacher is paid for, the heating. Everything.”

In one graphic, Picotte demonstrated that regional graduate rates begin to increase when mining projects move into development phase, such as Agnico Eagle mine’s Meadowbank project near Baker Lake.  He said the recent slight increase in graduation rates in the Kitikmeot and Qikiqtani regions could also be linked to increased mining activity with TMAC and Baffinland respectively.

The GN’s senior economist Francois Picotte says regional graduate rates begin to increase when mining projects move into development phase, such as Agnico Eagle Mines’ Meadowbank project near Baker Lake. He said the recent slight increase in graduation rates in the Kitikmeot and Qikiqtani regions could also be linked to increased mining activity with TMAC and Baffinland respectively.
Michele LeTourneau/NNSL photo

“When you see relatives going back and forth with the mine, as a student, it is inspiring,” said Picotte.

The symposium board of directors, with youth in mind, launched a new initiative this year. Youth ambassadors, two from each region, were brought to Iqaluit to learn all about the industry at the week-long event. Some work at mines, some don’t – but they were put in the hot seat April 4 to share their experiences, knowledge and ideas with representatives of the mining industry.

Similarly, the NWT and Nunavut Chamber of Mines hosted an education session, to have the conversation on how to link 3,000 of Nunavut’s 9,000 unemployed with mining jobs. Director of Inuit training programs for Nunavut Tunngavik Inc. Adeline Salomonie, representing the Makigiaqta Inuit Training Corporation, president of Nunavut Arctic College Pauloosie Suvega and executive director of Mining Matters Laura Clinton were on hand to discuss ongoing education and training efforts and plans.

 

Lack of land-use plan may hinder exploration

Exploration is down in the territory, and some speculate this is due to uncertainty related to the unfinished territory-wide land-use plan.

“That stopped in 2017. We don’t know exactly for sure why, but there’s different speculation. The territorial outlook from the Conference Board of Canada stated last year that we have ‘land-use issues.’ The third (draft) version of the land-use plan was published in 2016. Is this the only cause? Some people would say yes, some people would say no,” said Picotte.

“(Last year) we were told a land-use plan … wouldn’t come until 2022,” said Picotte.

That date has since been corrected to 2020. Picotte says that date offers hope in terms of exploration.

In his talk, Poloz noted trade deficits are a symptom of a developing economy.

“What happens is capital flows in in investments, in gold mines or whatever, and that’s the basis on which the thing balances out. The day you lose your attractiveness to investors, that’s when you should be concerned the story is over – but I think you’re very far from that,” he said.