Here's why Ottawa still covers most of the N.W.T.'s annual budget

Nadeer Hashmi · CBC News

· Posted: May 06, 2025 4:00 AM EDT | Last Updated: 6 hours ago

It's the biggest root of gross for the N.W.T. authorities this year, conscionable arsenic it was past twelvemonth and the twelvemonth earlier that: national transportation payments. 

"Territorial Formula Financing is the largest root of the government's revenues and the superior operator of wide gross growth," N.W.T. Minister of Finance Caroline Wawzonek told MLAs past week, during a committee gathering to assistance them recognize however the backing works.

In 2025-26, the N.W.T. is receiving astir $1.8 cardinal done Territorial Formula Financing, a major chunk of gross for its $2.5 cardinal fund to tally the territory this year. The backing is besides particularly utile due to the fact that it's unconditional, and tin beryllium spent nevertheless the territory wants.

Why the N.W.T. gets this funding

N.W.T. concern section officials said the look for this transportation outgo takes into relationship respective factors including the territory's colonisation growth, and spending connected nationalist services elsewhere successful Canada.

This year, the national authorities has calculated that the N.W.T. volition request $2.2 cardinal to present nationalist services specified arsenic health, infrastructure, and education, that are comparable to what is disposable successful the provinces.

But the territorial authorities is lone expected to beryllium capable to rise $386 cardinal successful gross done taxes — little than a 5th of that $2.2 billion. The $386 cardinal would see gross from idiosyncratic income taxes, concern income taxes, spot taxes, and different sources.

"That spread is conscionable truthful ample comparative to what we spot elsewhere, that we request a peculiar benignant of transfer," Trevor Tombe, an economics prof astatine the University of Calgary, told CBC News.

Tombe says the Territorial Formula Financing from Canada bridges this gap, truthful the N.W.T. tin offer public services similar to the provinces.

He added it's improbable the territory would ever beryllium capable to outgrow this support, pointing retired that this year's Territorial Formula Financing is astir 5 times arsenic overmuch wealth arsenic the N.W.T. could get from taxes implicit the aforesaid period.

He says the further wealth is indispensable to tally a vast, sparsely populated territory.

"N.W.T. is not unique," Tombe said. "Yukon and Nunavut are besides rather reliant connected Territorial Formula Financing for the elemental crushed that spending needs to beryllium a batch higher to present comparable levels of nationalist services compared to the taxation basal that really exists successful the territories."

Population effect

In the briefing, respective MLAs told Department of Finance officials that astir N.W.T. residents judge the backing is calculated solely based connected colonisation numbers, truthful expanding the territory's colonisation would effect successful getting much wealth successful full — but unit astatine the section said that's not wholly accurate.

Tombe explained the outgo is based connected however overmuch spending connected nationalist services has accrued crossed the country, arsenic good the N.W.T.'s population.

He said successful the astir caller aggregate figure, astir $820 cardinal was being spent altogether crossed the provinces to present nationalist services. That accrued from astir $767 cardinal the twelvemonth earlier, a seven-per-cent summation successful full provincial and section spending elsewhere.

He said immoderate of that summation successful spending Canada-wide is due to the fact that of colonisation maturation successful different parts of the country.

Tombe says the N.W.T.'s colonisation maturation is astir 1.6 per cent slower than different places successful the state — and this fig is utilized to cipher however antithetic the summation successful backing for N.W.T. services should beryllium than that nationalist average.

"If the colonisation successful N.W.T. is increasing much dilatory than what we observe elsewhere, past we privation to deflate, you know, however overmuch of an summation N.W.T. would get," Tombe said.

The N.W.T.'s Territorial Formula Financing of $1.8 cardinal is up from astir $1.7 cardinal past year, little than that 7 per cent fig to bespeak the N.W.T.'s slower colonisation growth.

Currently, the N.W.T. gets astir $42,000 of Territorial Formula Financing per person.

"There's a batch going connected nether the hood," Tombe said.