Nunavut gov't pulled out of Grays Bay Road and Port Project before federal funding decision

The Nunavut government pulled out as a co-proponent on thefederal funding application for the Grays Bay Road and Port Project, before learning whether the application was successful or not.

The move is significant as it's one of the Quassa government's first visible public policy shifts away from the previous government under Peter Taptuna.

We only have so much money to get stuff done.- Joe Savikataaq, Minister of Economic Development and Transportation

But the Kitikmeot Inuit Association, now the project's sole proponent, says the government made its decision to pull out based on inaccurate information.

• Nunavut, Kitikmeot Inuit team up to build longest road in Nunavut

The proposed project isa 227-kilometre all-season road to connect a proposed deep-water port at Grays Bay on the Northwest Passage between Bathurst Inlet and Kugluktuk to the winter road that services the N.W.T.'s diamond mines. It's one of Nunavutand the Northwest Territories'richest areas in minerals.

The project hasthe potential to create 2,250 jobs in Nunavut and contribute $665 million to the territory's mining revenues, according to a January 2018 economic assessment report.

In the Legislature on Wednesday, Economic Development andTransportation Minister Joe Savikataaq told the House the move was a nod to the government's new mandate.

"This is a new government, and a new mandate, and this new government decided that we have our priorities and we only have so much money to spend,"Savikataaqsaid, responding to a question fromGjoaHaven MLA TonyAkoak.

"We have a limited amount of resources. We have so many needs in our territory. For example, the member on many occasions has said we need a treatment centre in his community. All our money comes from one pot. If we spend here, we have none for there."

Savikataaq first notified the Kitikmeot Inuit Association (KIA) of the government's decision to withdraw asco-proponent of the funding proposal in a letter on March 26 which Akoak tabled in the Legislature.

The funding proposal to Transport Canada asked the federal government to cover 75 per cent of the project's $550 million price tag the total cost estimate has wavered over time, butSavikataaqshared that figure with the Legislature.

• Grays Bay project dealt huge blow as federal funding denied

Speaking with CBC News, Savikataaqreiterated how even if the funding application had been approved, the Nunavut government would still havehadto cover the extra 25 per cent. Money, he said, which could go toother programs and services.

TheGN'sdecision is based on inaccurate information, misunderstandingof concepts, and inadequate consultation with us- Stanley Anablak, KitikmeotInuit Association President

"There's only so much money we have and there's so many needs," he said."The priority of this new government changed from the last one."

But the Kitikmeot Inuit Association says the government was misinformed on the project's financing plan.

'The GN could walk away with no harm or foul.'

A week later,KIA president Stanley Anablak wrote back saying the territorial government could have still supported the project without paying a dime, and the extra 25 per cent would come from third party financing.

"It is also important to note that the GN's role in providing contingent support for the [Grays Bay Road and Port Project] was always intended to be a temporary measure to provide comfort to the federal government about the project's ability to obtain third-party financing," Anablak wrote.

"It was also always understood that if we were ultimately unsuccessful in lining up sufficient third party use, the GN was not committed to providing the contingent support.

"The GN could walk away with no harm or foul."

Asked why the government decided to step back, given the KIA's assertion the government had no obligation to fund anything, Savikataaq said he never heard anything about third party funding as part of the pitch to the federal government.

Of note, Savikataaq only took over theEconomic Development and Transportation portfolio four days before the KIA was notified the government was withdrawing as co-proponent, after Premier Paul Quassa shuffled his cabinet four months after the election.

GN would take on too much debt, officials say

The third party funding issue may be a moot point, however.

In further explaining the issues with the government's status as a co-proponent, Savikataaq and his officials said even if the it didn't have to pay anything, receiving the funding application would still burden the government.

Because it was the lead proponent for the funding application, if it was successful, the extra 25 per cent about $137.5 million would count against the government's debt cap.

The federal government caps how much debt Nunavut can have at $650 million. As of March 31, the Nunavut governmenthad $421 million indebt.

Savikataaq and his officials explained the project's funding agreement would have hit Nunavut's debt cap, and would have left too little wiggle room to secure funding for other projects a conclusion KIA refutes in its letter.

"Unfortunately, even though we have twice offered to come to Iqaluit to have a detailed discussion with GN finance staff to walk through our approach, these offers were never taken up," Anablak wrote.

The government says it still supports the project, in principle.

Premier PaulQuassathrew his support behind the project during November's leadership forum.

"Our government supported this development project and this government support will have to continue, especially for this new government,"Quassasaid at the time.

"We want our residents to have employment opportunities, particularly our Inuit residents. This requires further work. I am in full support of this initiative."