Resource Revenue after Devolution
Since devolution, the GNWT and Canada share the resource revenues from public land in the NWT. The GNWT has also agreed to share its portion of revenues with Aboriginal Governments.
Overview
Before devolution, the Government of Canada collected and kept almost all of the money companies pay to develop resources on public land in the Northwest Territories (NWT). Some Aboriginal Governments were also entitled to resource revenues from public land through their land claim and self-government agreements. The Government of the Northwest Territories (GNWT) did not receive any revenues from resource development and relied on federal transfer payments and taxes to deliver public programs and services to NWT residents like health care, education, housing and social services.
Since devolution, the GNWT and Canada share the resource revenues from public land in the NWT. This means tens of millions of dollars stay in the NWT each year. Because resource revenues fluctuate they should not be used to fund essential, ongoing public services, and are best suited for short term infrastructure projects and debt repayment.
The GNWT has also agreed to share its portion of revenues with Aboriginal Governments. This is in addition to the resource revenues from public land entitled to Aboriginal Governments through land claim and self-government agreements.
Resource revenue sharing provisions in existing land claim and self-government agreements
The Inuvialuit, Gwich’in, Sahtu and Tłįchǫ governments have modern treaties that provide title to large tracts of settlement lands. Title to these settlement lands generally includes surface ownership with subsurface ownership in some areas. The Gwich’in, Sahtu and Tłįchǫ agreements also provide a share of the resource revenues collected on public land throughout the Mackenzie Valley.
From the Mackenzie Valley, the Gwich’in and Sahtu are each entitled to receive annually:
- 7.5% of the first $2 million of resource revenues collected, or $150,000, and
- 1.5% of any additional resource revenues collected
From the Mackenzie Valley, the Tłįchǫ are entitled to receive annually:
- 10.429% of the first $2 million of resource revenues collected, or $208,580, and
- 2.086% of any additional resource revenues collected
The Dehcho First Nations Interim Resource Development Agreement also provides the Dehcho with a share of resource revenues in advance of a Dehcho Final Agreement.
To support economic development activities in the Dehcho, the Dehcho First Nations may access up to 50% of the following amount annually:
- 12.25 % of the first $2 million of resource revenues received, or $245,000, and
- 2.45 % of any additional resource revenues received
Net Fiscal Benefit
What is the Net Fiscal Benefit?
Ensuring the Northwest Territories (NWT) benefits financially from this devolution was an important subject for negotiations. The Net Fiscal Benefit (NFB) is the amount of resource revenues the Government of the Northwest Territories (GNWT) is able to keep after devolution, without affecting its federal transfer payments.
How much will the Net Fiscal Benefit be?
Before devolution, all of the money that companies paid to develop resources on public land in the NWT went directly to the federal government. Since devolution, the GNWT has been able to keep up to 50% of these revenues.
Is there a maximum amount of resource revenues that the GNWT can keep?
The GNWT receives a significant transfer of federal funds each year to ensure it is able to deliver programs and services comparable to those in other provinces and territories.
To ensure national fairness and consistency, there will be a maximum amount of resource royalties the GNWT can keep each year in addition to its federal transfer funds. Any revenues collected above this maximum will be deducted from the GNWT’s federal transfer payments.
Having a set ‘maximum benefit’ from resource revenues is consistent with the arrangements provinces have that also receive federal transfer payments.
Will the NWT miss out on a lot of revenue because there is a maximum amount of benefits it can keep?
The maximum benefit is determined based on a percentage of the GNWT’s Gross Expenditure Base (GEB), a part of the federal transfer payment that represents GNWT’s annual budgetary needs. This mean it will grow as the territory grows.
By 2020, the maximum benefit could be as high as $100 million per year…and growing.
Why has the GNWT agreed to a maximum benefit?
Having a maximum benefit is consistent with how provinces that also receive federal transfer payments are treated under the Equalization program, providing national fairness and consistency.
Frequently asked questions
What percentage of resource revenues will the GNWT receive after devolution?
The GNWT will keep 50% of the revenues collected from resource development on public land, up to a maximum amount. The Government of Canada will deduct its share, the remaining amount, from the GNWT’s federal transfer payments.
The maximum benefit is a percentage of the GNWT’s annual budgetary needs. This means it will grow as the territory grows. These arrangements are consistent with the arrangements of provinces that also receive federal transfer payments.
How much will the GNWT share with Aboriginal Governments?
The GNWT has committed to share up to 25% of its portion resource revenues with Aboriginal Governments that have signed the Devolution Agreement.
Why will the GNWT keep more revenues than Aboriginal Governments?
The GNWT delivers public programs and provides infrastructure for all NWT residents.
Resource revenues collected from public lands in the NWT are public resources that must be used to benefit everyone in the NWT.
Do some Aboriginal Governments already receive resource revenues from public land under existing land claim agreements?
Yes. The Gwich’in, Sahtu and Tłı̨chǫ agreements provide a share of the resource revenues collected on public land in the Mackenzie Valley.
The Dehcho government is also entitled to a share of resource revenues from public land through an Interim Resource Development Agreement.
After devolution, will Aboriginal Governments be required to give up the resource revenues they already receive from public land?
No. The resource revenues Aboriginal Governments already receive from public land are part of settlements reached with the Government of Canada.
The GNWT is offering Aboriginal Governments additional resource revenues from public land throughout the territory. Aboriginal people will also benefit from the GNWT’s remaining share of resource revenues, which will used for the benefit of all NWT residents.