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Economic growth in Canada’s North still low, federal agency says

Sheds line the shore of Great Bear Lake in Deline, Northwest Territories. The federal agency given the task of stimulating development in the North says economic activity has been declining in the three territories and remains far below the agency’s benchmark for growth.

PAT KANE/REUTERS

The federal agency given the task of stimulating development in the North says economic activity has been declining in the three territories and remains far below the agency's benchmark for growth.

The Canadian Northern Economic Development Agency's annual report to Parliament, filed earlier this month, indicates unemployment is growing and wages have stalled, partly due to lower commodity prices affecting the region's resources industry.

"Economic development and growth throughout the territories is challenging due to a sparse and widely distributed population, cyclical downturns due to a dependence on natural-resource extraction, a significant infrastructure deficit, high energy costs and labour-market challenges," the report notes.

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The agency combines different measures, such as employment and disposable income, to produce a Northern Economic Index number between 0 and 35, with higher numbers showing greater growth. The agency says its target is to achieve a value of between 24 and 26. In recent years, the agency reported a score of 13.5; in 2015-16, the most recent year available in the report, the agency measured a score of just 4.5.

In more concrete terms, the unemployment rate in the territories increased to 9.5 per cent in 2015, higher than the national rate of 6.9 per cent. The amount invested by businesses in mineral exploration declined from a height of $961-million in 2011 to $390-million in 2015.

Brendan Marshall, vice-president of economic and northern affairs at the Mining Association of Canada, says a major challenge for the industry is that mining companies face additional costs in operating in Canada's northern region because of a lack of infrastructure.

"[Commodity] price in the last few years hasn't helped, but there are other challenges at play that factor into the decisions that companies make about where they're most likely to be able to invest, to turn a deposit into an operating mine," Mr. Marshall said.

Along with infrastructure, the territories' isolated communities also face big challenges in areas such as affordable housing and health care.

The federal Liberals' second budget, tabled March 22, pledged new money to help residents of Canada's three territories, including $300-million over 11 years to invest in housing, much of it in Nunavut, and $108-million over four years directed to the Territorial Health Investment Fund.

The funding for the economic-development agency, however, is set to decline from $50-million in 2017-18 to $24-million in 2018-19 due to the discontinuation of initiatives such as the Canada 150 Community Infrastructure Program.

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The Canadian Northern Economic Development Agency did not respond to a request for comment on Friday.

New Brunswick MP Ginette Petitpas Taylor, parliamentary secretary to the Finance Minister, represented the Liberal government in Whitehorse on Friday, as part of a tour promoting the budget.

Two territorial leaders are coming to Ottawa to speak directly to Members of Parliament about how to spur economic growth in the North. Northwest Territories Premier Robert McLeod and Yukon Premier Sandy Silver will have separate appearances at the House of Commons finance committee on Tuesday.

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Assistant editor, Ottawa

Chris Hannay is assistant editor in The Globe's Ottawa bureau and author of the daily Politics newsletter. Previously, he was The Globe and Mail's digital politics editor, community editor for news and sports (working with social media and digital engagement) and a homepage editor. More

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