Arctic Yearbook 2014 - Page 208

208 Arctic Yearbook 2014 1973, its GDP peaked at $178 million dollars, or $25,500 per citizen (in 2005 dollars). However, overconsumption and poor revenue management quickly erased this expansion and, by 2007, its GDP had shrunk to less than $19 million dollars, or $1,900 per citizen (Bauer 2014a). The economy has never recovered, and the government remains fiscally troubled (Bauer, 2014a). Mining further caused serious environmental consequences: 80 percent of the island’s land was stripped and 40 percent of its marine life killed (Shennon 1995). Drawing on lessons from Nauru and other similar cases, some governments have established funds to sustain wealth from non-renewable natural resources. In some jurisdictions, the establishment of a wealth fund arises out of legitimate concerns about the potential impacts that large, volatile, and exhaustible natural resource revenues have on the stability of an economy. In other regions, fund establishment comes from a desire to promote transparent and accountable management of expected revenue flows. Another common objective for establishing a fund is to build an endowment for future generations or the elderly. However, natural resource funds are not always established with the public or national interest in mind. In some countries, for example Azerbaijan, natural resource funds enable governments to avoid public scrutiny or bypass formal oversight (Bauer, 2014a). The NWT Heritage Fund: Legislation (Act), Current Status, and Opportunities In preparation for new resource royalties flowing from Devolution, legislation allowing for the establishment of an NWT Heritage Fund was passed in 2012, based on the framework of the Alberta Heritage Fund (GNWT 2013b).14 In the fall of 2013, the NWT’s Ministry of Finance undertook public consultations on the budget in seven regional centers in the territory. At these public consultations, the NWT’s Ministry of Finance proposed that 5 percent of resource revenues be placed into the fund, or approximately $2.25 million (as of 2013) (Wohlberg 2013), while 95 percent would be earmarked for infrastructure investment and servicing the GNWT debt (GNWT 2013a).15 This sparked a healthy public debate over the appropriate deposit amount for the fund, given other perceived pressing needs, such as funding infrastructure or servicing debt (Wohlberg 2013). On February 10th 2014, MLA Wendy Bisaro tabled the public policy report A Question of Future Prosperity: Developing a Heritage Fund in the Northwest Territories (Briones et al. 2014) in the NWT Legislative Assembly, in order to press the Minister of Finance to commit more than 5 percent of revenues to the fund, and to introduce legislation to administer it. Following the debate, the Minister of Finance announced that a 25 percent share of the GNWT royalties from the extraction sector will be allocated to the new Heritage Fund. Regulation was passed in 2013 prior to the NWT Fund beginning to accrue significant revenue (Northwest Territories Heritage Fund Regulations 2013). A Question of Future Prosperity