Theories of devolution in NWT

The transfer of power from the federal government to the Northwest Territories government has been going on in stages for decades as the territory’s population and economic base has steadily grown and matured. With Yellowknife established as the plucky capital in 1967, the territory has already won authority over its hospitals, schools, highways and forestry industry, thanks to six agreements signed between 1987 and 1995.

But this latest milestone in what’s called the “devolution” process — signed by Prime Minister Stephen Harper and N.W.T. Premier Bob McLeod in Yellowknife on March 11 — is one that makes the mining industry sit up and take notice, as it transfers power to the territorial government over onshore, natural-resource development.

“Our government recognizes that northerners are best placed to make the important decisions about how to run their economies and how to maximize use of their resources,” Harper said in Yellowknife.

While the March 11 ceremony signalled the end of top-level negotiations, a second round of consultations remains with Aboriginal groups and other stakeholders in the north, with public hearings set to take place over the next two months.

When this latest devolution stage takes effect on April 1, 2014 —already dubbed “D-Day” up north — ownership of public lands will shift to 84% owned by the N.W.T. government and 16% owned by Aboriginal groups with settled land claims, from the current ratio of 82% owned by the federal government, 2% owned by the N.W.T. government and 16% owned by Aboriginal groups.

Just as importantly, the territorial government will be responsible, instead of the federal government, for collecting resource-extraction royalties, which will be split fifty-fifty with the federal government. That translates to around $65 million per year flowing directly into N.W.T. government coffers, with a fifth of that cash redirected to Aboriginal groups who have signed on to the deal.

The cash flow from several new mining projects on the drawing board would be affected, including Canadian Zinc’s Prairie Creek, Fortune Minerals’ NICO, Tamerlane Ventures’ Pine Point, Tyhee Gold’s Yellowknife, Avalon Rare Metals’ Nechalacho and De Beers’ Gahcho Kué.

On top of that, the federal government will grant the N.W.T. another $65 million or so annually to build up government capacity to deliver services inherited from the federal department of Aboriginal Affairs and Northern Development Canada (formerly called Indian and Northern Affairs Canada, and before that, Department of Indian Affairs and Northern Development).

The federal government signed a similar deal with the Yukon government 10 years ago, in a devolution widely credited with having helped provide the Yukon with a more dynamic economy compared with its territorial cousins to the east.

With the N.W.T. having a population of only 42,000, the territory is a long ways off from seeking provincial status. Indeed, N.W.T. residents are, and will remain, heavily subsidized by southern Canadians to the tune of $1.1 billion in transfer payments every year.

Even though the Northwest Territories has the highest per-capita income of any territory or province ($52,747 in 2009, or $335 more than Alberta), no one really begrudges the subsidies: It’s simply the price of nation-building, and one relatively low-cost way of exerting Canadian sovereignty over the vast stretches of the Far North.

This latest devolution deal leaves untouched some of the more contentious tax issues: offshore oil and gas royalties, which will remain in federal hands; and the royalty on the aging, onshore Norman Wells oil field, worth around $100 million annually, and which the federal government is keeping. Also, the federal government will continue to lead on environmental assessments, and will retain responsibility for remediation of existing significant contaminated-waste sites.

One promise of devolution in the N.W.T. is that it will streamline the bureaucratic process for developing resources in the territory, which has built-up a reputation for red tape in recent years.

It’s still unclear whether permitting under the new territorial-led regime will be consolidated in a manner similar to the federal National Energy Board, or whether there will be a continuation of the strong individual regional boards operating under the N.W.T.’s overarching Mackenzie Valley Land and Water Board, in a system many local Aboriginal groups are quite happy to see live on.