I'll start right away. Again, thanks to all of you for inviting me to this committee meeting.
When this committee first thought of inviting territorial premiers to speak to you, it was to consult us ahead of the federal government's 2017 budget. Of course, for us, the timing didn't work out, and Canada released its budget two weeks ago. Given this, though, I thought it would be appropriate to speak to you today about this budget and what it means to the Government of Nunavut.
Mr. Chairman, please consider this a post-budget debriefing, instead of a pre-budget consultation.
The budget contained four take-aways of particular interest to Nunavut: a much-needed investment in housing, the Arctic energy fund, the national trade corridors fund, and the renewal of the territorial health investment fund. I'll touch briefly on these today and then be available to answer some of the questions.
On the housing first, Canada committed to provide $240 million over 11 years to help address the Nunavut housing crisis that we face. To us, this shows that Canada remains aware that the lack of housing is a major issue in Nunavut.
In particular, we appreciate the fact that Canada has committed to a long-term, stable funding mechanism. We prefer this to a short-term announcement. We've seen in the past that knowing about a decade of funding helps us to plan ahead and means that we can be smarter in our housing investments. This ability to plan ahead is particularly important in our communities where we can only bring in supplies by boat, by supply ships, for a few short months of the year. Our Nunavut Housing Corporation is the provider of public housing units in the territory and will continue to work closely with the Canada Mortgage and Housing Corporation and use this investment to build homes for the most vulnerable Nunavummiut.
While this new funding is significant, Nunavut remains in a housing crisis that will continue to limit the well-being of our people. Leading up to budget 2017, we had asked the Government of Canada to invest $525 million over four years to build 1,000 of the roughly 3,000 housing units that we desperately need in Nunavut. Budget 2017 has proposed far less. While we appreciate the $24 million a year to help us build homes and shelter for a number of Nunavut's families, we'll continue to require more federal support in the years ahead to help us eliminate Nunavut's housing crisis.
Next, Mr. Chairman, I was encouraged to hear about the proposed Arctic energy fund. While details of this are still limited, we understand that this $400-million fund is to address energy needs in communities across the territories over the next 10 years. We are hopeful that investments made through the fund will help Nunavut reduce our dependence on diesel-burning electric generators. We want to do our part to address climate change, and the Canadian Arctic is one of the first places in the world to experience the negative impacts of the warmer world.
At the same time, Nunavut is perhaps the least equipped to move away from carbon-intensive fossil fuels. Our remote communities, small populations, and challenging environment mean that we do not have access to the same solutions as other jurisdictions in Canada. Before we begin to reduce our reliance on fossil fuels in Nunavut, we need to improve energy security in our communities, where power outages can be disastrous.
Currently, half our communities are supported by power plants that have reached or passed the end of their expected useful life cycles. The Government of Canada built many of these when Inuit first moved into permanent settlements in the 1960s and 1970s. These upgrades and replacements are badly needed.
However, we're unable to pass the high cost of infrastructure upgrades on to Nunavut ratepayers, many of whom already cannot afford the high cost of electricity in our territory. As a result, the Government of Nunavut already covers almost 80% of the cost of delivering electricity in our territory.
The Senate Standing Committee on Energy, the Environment and Natural Resources recently acknowledged the need for continued investment in energy infrastructure in our territory of Nunavut. Consistent with that, my government had requested $250 million over 10 years to replace nine power plants and 17 generators so as to improve safety and the viability of our communities.
Depending on how it's implemented, the Arctic energy fund could address some of this need. Through this fund, we hope to upgrade and replace aging generators to provide more security for our remote communities. As part of this, we intend to integrate renewable energy into our existing electrical infrastructure. Over time, this may lead to more sustainable and environmentally friendly alternatives.
Looking to budget 2017, I am especially hopeful that Nunavut and our neighbours in the Northwest Territories will benefit from a national trade corridors fund, which is meant to better connect Canadian goods with markets. I'm thinking specifically of how the fund might support our proposed Grays Bay road and port project, which would connect western Nunavut's rich mineral potential with Arctic shipping routes and the international market. This proposed port at Grays Bay on the Northwest Passage would be the only deepwater port in the western Arctic and Canada's first overland connection to a deepwater port in the Arctic Ocean.
The total construction cost of the Grays Bay road and port project is estimated to be around $500 million but the project wins out in the cost-benefit analysis. According to some estimates, just one successful mine developed alongside the project could add roughly $5.1 billion to Nunavut's GDP over 15 years and could add as much as $7.6 billion to Canada's economy as a whole. The project could add jobs in a region of Canada that is eager to work but that suffers one of the highest unemployment rates in the nation. It would connect Nunavut, for the first time, to the rest of Canada and international shipping routes. Such a road would greatly increase viability of mining projects in the region.
Mr. Chairman, as you can imagine, we in Nunavut would look forward to learning more about this national trade corridors fund and how it could support northern infrastructure like the Grays Bay road and port project.
The final budget initiative of interest is a proposal to extend the territorial health investment fund for four years at $13.5 million per year. This funding we need badly, especially following Canada's cut to the Canada health transfer growth rate, which starts this year. Provinces and territories receive Canada health transfer based on population. This equal per capita spending does not consider basic realities in Nunavut health delivery and it severely underfunds Nunavut's health system as a result.
For example, our small communities cannot take advantage of the more efficient health delivery that large and connected population centres take for granted. Another example is the high and unavoidable travel costs of bringing patients and health professionals to and from our isolated communities. Canada intends to have the extended territorial health investment fund cover some of these added costs and to increase innovation in our health system. Frankly, the $13.5 million per year falls short for the Nunavut health system.
It covers less than one-fifth of the $75 million our government pays for medical travel each year. In fact, medical travel alone costs Nunavut almost twice as much as we receive from the entire Canada health transfer in any given year. In short, we'll put the short-term investment fund extension to good use by offsetting a portion of our medical travel cost. However, we are still a long way from being able to offer Nunavummiut health care services comparable to those in southern Canada.
To wrap up, budget 2017 contains some good news for Nunavut, like the long-term care support for housing. It also proposes some interesting funding mechanisms we think could lead to important investments in the territory. I'm thinking of the Arctic energy fund and the national trade corridors fund. As I say, however, the devil is in the details. We do not yet know how Nunavut can access these funds. Until these details are available and funding decisions are finalized, we'll be optimistic that Nunavut will benefit.
Finally, we will put the extended territorial health investment fund to good use, but certainly we need some support for health delivery in Nunavut. Our government, communities, and people rely on continued federal investment, like the funds proposed through budget 2017. While we still have a long way to go, budget 2017 is good for Nunavummiut and a step in the right direction. My colleagues and I would like to see more budgets like the one announced last month. We continue to encourage Canada to invest in Nunavut and Nunavummiut.
However, we remain very concerned with the requirement to introduce a carbon tax on Nunavummiut and businesses in our territory and its possible negative effect on those investments. Nunavut relies exclusively on fossil fuel for home heating, electrical generation, and transportation. With no feasible alternative available, the carbon tax will simply be another tax with no positive mitigation or adaptation effects being seen at all.
I'll give you an example. The mining company, Agnico Eagle, currently engaged in a mining operation near Baker Lake, estimates that, when fully implemented, a carbon tax will cost an additional $20 million per year, or $300 million over the life of their mining operations in Nunavut.
For marginal mines, that could be a game-changer with respect to proceeding or not with the development and creation of much-needed jobs and tax revenues in an environment where mining is already two and a half times as costly to develop and operate as in southern Canada. Firms are already taking a second look at the economic viability of their projects once a carbon price is imposed.
For Nunavut to succeed, to become self-reliant, and to prosper, barriers to investments such as a carbon price and the recently announced five-year moratorium on issuing offshore oil and gas permits must be minimized, all while ensuring a balanced approach to conservation.
Again, Mr. Chairman, I thank you for giving me this opportunity to speak, and I'll be happy to answer questions after my minister colleague gives his presentation.
First, I'd like to thank you for inviting me to have the privilege of addressing you. We're here to discuss issues that are important to Nunavut. There are many issues, and they're big and they're complex. Nunavut is a unique territory in terms of it not being that simple to get a simple task done.
We thank you that you're going to help us build our communities better and stronger, and that's what we need. As the Minister of Community and Government Services, I am responsible for the projects, the programs, and the services that contribute to building capacity in Nunavut communities. I have to do that in a timely and cost-effective manner.
We appreciate the funds we get, and we have to make sure that these funds are spent wisely. Although the municipalities are funded through our department, there are very few that are tax-based. Therefore, they're all block funded, so all the funds to run all the communities come through the GN, the Government of Nunavut.
I'm very grateful that there's a growing trend toward long-term, multi-year federal funding. It is especially important that there is long-term funding for projects, so that we can have our plans laid out in a multi-year plan, so that we don't always have to rush and spend the money quickly because there's a deadline in terms of funding and project ends.
It was encouraging to see that some of the investments in the 2017 budget will help Nunavut's economy grow and diversify. Aside from the four areas that were identified, I'm concerned that there are other areas that are not being addressed. I'd like to address those.
Improving the connectivity in the north needs to be built into the federal funding strategy in future budgets. More focus in this area will have major beneficial impacts on overall development in the territory. I believe we're the only territory that does not have any fibre optic broadband links. We're all satellite, and I believe on two occasions we had problems with satellites and had no communications at all within Nunavut. That is a serious problem when it occurs, as we're all aware that everything is connected to the Internet now. It's just a fact and a way of life.
Having access to improved, affordable Internet will increase businesses' and economic benefits and enable better delivery of services to residents, as well as better access for education and health, for both youth and adults. Once the people of Nunavut are connected to the global economy, they will find ways to empower themselves. That is the story of Nunavut.
Although we have been very resilient and resourceful throughout our history, we need the proper tools to adapt to many of the challenges. We know now that, with the Internet, you have a global audience and a global economy, and as long as you have the transportation connection and the Internet connection, the economies of scale are worldwide.
Nunavut is a vast territory with potential, and it'll take considerable investment on the part of the Government of Canada to help unlock the potential, but it's a worthwhile venture. We believe that any funds that are invested in Nunavut will bring many more investments back, because unemployment is really high and we need the jobs that are available with the help of the Canadian government.
Thank you, Mr. Chairman.
Thank you, Mr. Premier. Yes, I think it's no secret that it costs three times as much to operate anything in the north. I always say that a dollar down here is like 33¢ in the north.
I think another important point is the fact that any investment in infrastructure in the north, whether it be housing or any kind of infrastructure, is actually a direct investment in the southern economy, because anything we buy up there to build with comes from the south. You talked about major infrastructure. You mentioned the Grays Bay port and road project. I was in Winnipeg about a week and a half ago for the Hudson Bay regional round table. We just had the 20th mining symposium in Iqaluit this week. There are two major projects there, Grays Bay and the Manitoba Hydro road project coming up into the Kivalliq region.
We all know that in order for the economy to grow...and that's what this is about, economic growth for the territory and the government's commitment to look toward creating a sustainable economy in the north. Canada invested in the roads across the country in the south. They invested in the railway. They invested in the harbours. The only jurisdiction left in Canada that hasn't had that investment is the north, and specifically Nunavut.
Do you think there is a requirement for this type of infrastructure investment to allow for the economy to grow and to have the opportunities there for the territory to create employment, lower the cost of living, and bring in alternative sources of energy? As Minister Savikataaq mentioned, there's also the connectivity with fibre optics. I know it's something that the territory can't afford.
As we know, an investment like this would be high up front, but with dividends would pay for itself in the long run and create that opportunity. What we all want is a sustainable, self-sufficient, self-reliant territory, and these investments would help achieve that.