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.