Northwest Territories Member of Parliament Michael McLeod this week defended his government’s response to northern affordability and the cost of living.
“Given the challenges with our supply chains, given the uncertainty of the war in Ukraine, we may see an increase in prices stay in place for some time,” he said in a telephone interview with Northern News Services on March 15.
“Whether that’s into the summer, I’m not sure. That’s all speculation.”
“So I think people have to be prepared to manage their finances accordingly. We’re unsure how long this is going to last.”
McLeod admitted that high prices, including at the pumps, remain a serious challenge and that the situation could stay that way for the foreseeable future.
Although the federal government’s incremental carbon price increases will see another rise on April 1 for most of the country, he said that should not be confused for why gas prices are so high.
“I think we need to be very clear that the price people are paying for gas right now, those increases are driven by global market forces, not by the price of pollution,” he said.
“On April 1, the price will increase for most of the country, but in the NWT because the pricing system first took effect on July 1, 2019, the [new] increase will not take effect until July 1, 2022.”
McLeod pointed out that are other savings including that 16 communities — those without year-round road access — won’t see gas price increases at all as fuel for those locations were purchased last fall.
“We need to be clear that in the Northwest Territories, the GNWT’s carbon levy does not apply to aviation fuel,” he said.
“There’s also a 100 per cent rebate on the heating fuel being applied at the point of purchase.
“We also have to recognize that the GNWT has introduced a cost of living offset through the Canada Revenue Agency, which provides $260 per year per adult resident and $300 a year for each child in the upcoming fiscal year.”
Jennifer Phillips, executive director of the Northwest Territories Chamber of Commerce, said this week that the territorial government should consider pausing carbon price increases in the near-term to help consumers.
“We are concerned that these [carbon price] costs will make it more difficult for businesses to break even let alone make a profit after two years of lockdowns, closures, increased labour costs and significant financial losses,” she said.
“We’d like to see the GNWT temporarily postpone the implementation of the carbon price increases, at least until inflation drops to normal levels, as Alberta has done.”
McLeod said the federal government is committed addressing affordability issues post-pandemic and has put in place several rebate programs. Among them are a full rebate on home heating fuel applied at the point of purchase. The GNWT also has a cost of living offset through the Canada Revenue Agency, which provides $260 per year per adult NWT resident and a $300 per year rebate for each NWT child in the upcoming fiscal year.
McLeod said interest rates are expected to increase this year in response to high prices and because of the Bank of Canada’s efforts to return to more moderate inflation rates.
He said this issue is “a major source of uncertainty” and one he is following very closely.
“Prices for oil and other commodities have risen significantly,” he said. “This will add to inflation around the world and have negative impacts on confidence and supplier disruptions that could weigh on global growth.”
“Financial market volatility has increased and the situation is very fluid.”
Phillips said that although increasing interest rates will help tame inflation, she remains worried about rising gas and food prices, tax increases, and the rise in mortgage rates.
She is also concerned about what it will mean for the territory’s finances.
“We also have concerns with the additional increase in potential interest costs for the territorial budgets,” she said. “With a current debt forecast of $1.59 billion dollars as of March 31st 2022 according to last year’s budget, each time interest rates increase 0.25 per cent, the GNWT has to spend almost $4 million in extra spending due to that cost increase.
“These funds could be used for many other programs and services to benefit Northerners.”