Ministerial transition binder

Areas of action

Innovation & diversification

Foster the sustainable growth of other economic sectors with a focus on strengthened entrepreneurship and northern innovation.

Description of Planned spending

	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25 and Ongoing
Grants & Contributions	46,354,465	44,878,370	50,591,420	50,556,641	47,537,000	29,037,000
Operating	18,666,941	18,882,718	19,357,447	20,140,242	20,115,762	16,252,670
Total	65,021,406	63,761,088	69,948,867	70,696,883	67,652,762	45,289,670

Canada's three territories are home to…

• 0.3% of Canada's population (124,000), covering nearly 40% of the nation's landmass
• A high proportion of Indigenous peoples, 53.3% of the population in the territories identified as Indigenous in 2016, versus 4.9% in Canada at large
• A younger population than Canada as a whole; over 60% of the population is under the age of 40
• Most of the territories are governed through modern treaties with Indigenous people

Description of Percentage share of gdp by selected sectors

Nearly half of the territories GDP is from the public service and the extractive industries (mining).

Public Sector	32%
Extractive Industries	17%
Construction	13%
Real Estate, Rental and Leasing	11%
Transportation and Warehousing	5%
Other	22%

Source: Statistics Canada. Table 36-10-0400-01 Gross domestic product (GDP) at basic prices, by industry, provinces and territories, percentage share

Labour market

• The territories have a higher unemployment rate than the rest of Canada, though it has declined in recent years
• Large unemployment gaps exist between Indigenous and non-Indigenous residents (e.g. Yukon – 22.3% versus 5.9%)
• Higher unemployment rates exist outside of territorial capitals (e.g., Yellowknife 5.9%, rest of NWT 21.9%)

Skills

• National Indigenous Economic Development Board estimated that Indigenous people in the territories could earn an additional $1.1 billion annually with the same education and training as non-Indigenous
• Northern-based training and research has steadily increased through initiatives such as the Canadian High Arctic Research Station, Yukon University, and a Regional Training Centre for the Marine Conservation Area in the High Arctic
• Conference Board of Canada expects 27% of jobs created in Nunavut mines to go to people living in the territory, compared to 70% of jobs in the service sector

Transportation

• All Nunavut and several NWT communities are heavily reliant on marine transportation and / or aviation for access to diesel and goods (e.g., food, construction materials)
• Degrading permafrost is having an impact on all-season and winter roads
• Infrastructure investments have increased economic opportunities by (e.g.,137 km Inuvik-Tuktoyaktuk highway) connecting southern communities to the Arctic Ocean

Energy

• Diesel continues to be the primary source of energy across the North, despite being more expensive and producing more GHGs than other sources
• Clean and renewable energy such as biomass energy projects are helping to displace the use of diesel, reducing environmental impacts and improving socio-economic conditions

Broadband

• Limited availability, lack of reliability and high cost of high-speed broadband create barriers to participation in the digital economy
• Access to essential services are also limited (e.g., health care, education, public safety, banking)
• Significant new developments are on the horizon such as Kivalliq Hydro-Fibre Link and the 1,700 km underwater fibre optic cable from Greenland to Nunanvut.

Diversification

• Tourism is a growing sector but facilities and services are not consistently available to benefit from new opportunities (e.g., cruise ships)
• There is an increasing focus on food production and systems to reduce reliance on imported foods and address food insecurity

Innovation

• A strong entrepreneurial spirit exists in some areas and sectors
• The mining industry is an essential part of the development of new technologies and is also a technologically advanced sector
• The number of SMEs per capita is higher than the Canadian average of 39.2 – Yukon (57.3) and NWT (48.5)
• Leveraging anchor institutions (e.g., the new Yukon University; the Canadian High Arctic Research Station), could help spur growth of the innovation ecosystem

Smart ICE Technology Adaptation – Pond Inlet, Nunavut

SmartICE uses sensors mounted on a qamutik (sled) to measure ice thickness. This information, combined with Inuit traditional knowledge, feeds into community-maintained maps to assist in planning safer travel.

CanNor funding supported SmartICE adapting technology for use in temperatures below –30°C by hard wiring positioning and measuring sensors and includes insulation, heaters, and a simplified interface easily used with bulky gloves. Data will show how climate change is affecting the northern environment and how communities are adapting.

Aurora Geosciences Geo-Sensing Innovation Project – Yellowknife, Northwest Territories

A system that identifies new mineral deposits is improving exploration for mineral resources in the North. With support from CanNor, Aurora Geosciences Ltd, a Yellowknife-based exploration services company, re-engineered commercially available capacitively-coupled resistivity equipment to enable the equipment's signal to penetrate deeper into the ground. Towed by snowmobile over frozen tundra, the improved technology will significantly reduce exploration costs in comparison to traditional ground resistivity surveys.

Northlight Innovation Hub – Whitehorse, Yukon

Northlight Innovation is a brand new 24,000 square foot facility located in Downtown Whitehorse managed and operated by local non-profit Yukonstruct Society. This facility is a gathering place for entrepreneurs and innovators, who have access to cutting edge manufacturing equipment, educational workshops, a collaborative co-working environment and business support services.

CanNor funding supports renovation and construction of interior displays, along with start-up costs for the first two years to build the capacity of the Society and implement the systems needed to enable future sustainability.

Background

Canada's territories – Yukon, Northwest Territories, and Nunavut – are home to 124,000 people, just over half of whom are Indigenous, living across 40% of Canada's landmass. The territorial North has a diverse range of opportunities, often tied to its immense natural resources, the beauty of its landscapes, and the unique cultures of its residents.

While the resource sector remains a cornerstone of the northern economy, new opportunities for growth are emerging across a diverse range of sectors including tourism, food sectors, the knowledge economy and cultural and traditional sectors. With 60% of the population under the age of 40, the territories' youth, with the right educational and workplace supports, have tremendous potential to help implement transformative changes.

The North is disproportionately impacted by climate change as the Canadian Arctic is warming three times faster than the global average. As a result, this region is experiencing a range of environmental impacts including longer and more widespread sea-ice-free conditions, thawing permafrost, and changes in distributions of species. These impacts are increasing the risk of costly damage to infrastructure, changing traditional food sources, threatening transportation routes and affecting the social and cultural well-being of northern Indigenous peoples. Climate change is also creating new avenues for growth including expanded access to natural resources and increased tourism opportunities. In addition, the North could emerge as a world leader in mitigation/adaption and cold climate technologies, presenting new economic development opportunities.

Governance

The twentieth and early twenty-first centuries have witnessed a strengthening of public government across the territories. With the devolution of federal authority to territorial governments, they have become more independent. Province-like powers over land and resources were devolved from the federal government to Yukon in 2003 and to the Northwest Territories in 2014. Negotiations with Nunavut over these authorities and responsibilities are ongoing, with an agreement-in-principle signed in the summer of 2019.

Most regions in the territorial North are governed by modern land claims – constitutionally protected treaties with Indigenous people involving the Indigenous, federal and territorial governments. Modern treaties are key tools for achieving reconciliation and establish renewed nation-to-nation, Inuit-Crown, government-to-government relationships based on respect, cooperation, partnership, and the recognition of rights.

Modern land claims include co-management governance provisions (federal, territorial, Indigenous) for lands and resource management, as well as for the overall environmental assessment (EA) of major projects.

Economic overview

Canada's territories offer vast potential for resource development, innovation, business development and economic growth. Progress in these areas contributes to a vibrant and inclusive northern economy which not only benefits Northerners, but all Canadians. Nevertheless, capacity and foundational infrastructure issues remain key challenges and barriers to economic development.

(real GDP, all three territorial economies, percentage change*)

Description of Solid growth ahead for the territories

The data forecasts strong GDP growth in the territories.

Year	Real GDP, percentage change
2010	6.3
2011	-2.3
2012	1.4
2013	4.2
2014	2.1
2015	-1.6
2016	3.3
2017	5.3
2018f	4.6
2019f	5.3
2020f	4.5
2021f	1.3
2022f	5.4
2023f	1.5
2024f	2.1
2025f	-2.8
f=forecast *based on 2012 Sources: The Conference Board of Canada; Statistique Canada

As projected by the Conference Board of Canada, as a whole, the territorial economies are forecasted to have an average growth rate of 5.3% in 2019 and 4.4% in 2020 before averaging 1.5% per year between 2021 and 2025.

This overall growth is being driven in part by strong growth in Nunavut, and the Yukon while the Northwest Territories' outlook is modest by comparison.

Economic development and growth throughout the territories is challenging due to a sparse and widely distributed population, a significant infrastructure deficit, skills gaps, climate change, high energy, living and operational costs, and cyclical downturns associated with fluctuations in the levels of resource development activity. However, as CanNor embarks on its second decade, the focus on economic diversification continues to expand and includes increased linkages to the global economy and clean growth in the North. Working with Northerners to cultivate their strong entrepreneurial sprits to build a diversified, sustainable, and dynamic economy across the territories is a key component to fostering long-term sustainability and economic prosperity. This work includes advancing opportunities for meaningful inclusion of Indigenous peoples and businesses.

Description of Percentage share of gdp by selected sectors

Nearly half of the territories GDP is from the public service and the extractive industries (mining).

Public Sector	32%
Extractive Industries	17%
Construction	13%
Real Estate, Rental and Leasing	11%
Transportation and Warehousing	5%
Other	22%

Source: Statistics Canada. Table 36-10-0400-01 Gross domestic product (GDP) at basic prices, by industry, provinces and territories, percentage share

Labour market

The territories have a higher unemployment rate than the rest of Canada, although it is declining. There is a large unemployment rate gap between Indigenous and non-Indigenous residents in the territories. In 2016, the Indigenous unemployment rate in Yukon was 22.3% while the non-Indigenous rate was 5.9%. The unemployment rates outside the territorial capitals are also consistently higher than the average territorial rate. For example, in Yellowknife the unemployment rate was 5.9%, while the rest of the Northwest Territories was 21.9% (Census, 2016).

Skills

From 2011 to 2017, the population aged 25-64 without a completed secondary education decreased overall in the territories, but is still quite high. The Conference Board of Canada expects that only 27% of the jobs created in Nunavut mines between now and 2025 will go to people living in the territory, compared with 70% of jobs in the services sector. The National Indigenous Economic Development Board estimated that Indigenous people in the territories could earn an additional $1.1 billion in annual income if they had the same education and training as non-Indigenous people. Northern-based training and research has been steadily increased through initiatives such as the Canadian High Arctic Research Station, Yukon University, and a Regional Training Centre for the Marine Conservation Area in the High Arctic.

Transportation

There are important differences in the levels of infrastructure in the territories. For example, all communities in Nunavut and several Northwest Territories communities rely exclusively on marine transportation and/or aviation for communities' diesel shipments, cargo for goods and travel between communities. In comparison, Yukon has a well-developed road network with access points to British Columbia and Alaska. Infrastructure investments have increased opportunities such as the 137 km Inuvik-Tuktoyaktuk highway connecting southern communities to the Arctic Ocean.

Energy

Diesel continues to be a significant source of energy at the community level across the territories, despite efforts to introduce clean energy technology. Diesel power is more expensive and produces more greenhouse gas emissions than grid-connected electricity and significantly raises the cost to households and industry. Clean and renewable energy like biomass energy projects are helping to displace the use of diesel, reducing environmental impacts and improving socio-economic conditions.

Broadband

Although significant new developments are on the horizon, the currently limited availability, lack of reliability, and high cost of high-speed broadband is a barrier to Northerners' participation in the digital economy, as well as to accessing essential services such as health care, education, government, public safety and banking.

Resource industries

Description of Canada's natural resource potential

Much of Canada's natural resource potential lies in northern, remote and isolated regions – but it is not being fully realized.

Key facts:

• 40% of the land madd is above 60 degrees latitude.
• This are contains only 12% of know deposits.
• 76% of projects north of 60 degrees.
• 61% of projects south of 60 degrees are undeveloped.

The mining sector is the cornerstone of the northern economy and is a significant driver for territorial and Indigenous businesses (17% of GDP for the territories). Much of Canada's mineral resource potential lies in the territories; 76% of the potential projects north of 60° are undeveloped, including minerals used in the production of new technologies such as solar panels. The sector serves as the economic pillar across the territories. In 2018, the value of mineral production in the North was approximately $3.5 billion: $2,110 million in the Northwest Territories, $1,164 million in Nunavut, and $217 million in Yukon. Canada is a world class leader in mine remediation activities, creating economic opportunities such as those connected to the remediation of Giant Mine in the Northwest Territories and Faro Mine in Yukon.

Mineral exploration spending is a predictor of future growth and long-term interest in the region. The future of mining in each territory is quite different: revenues are set to decrease in the Northwest Territories as diamond mines wind down but mining is increasing in Nunavut as new gold mines open.

Northern Canada has large untapped resources of crude oil and natural gas. With modern technology, higher prices for oil and natural gas, and regulatory approval, the North could become a significant producer of petroleum. Current oil reserves are estimated at 18.3 billion barrels in Nunavut, 1.2 billion barrels in the Northwest Territories, 900 million barrels in Yukon. Natural gas resources are estimated at: 181.4 trillion cubic feet in Nunavut, 16.4 trillion cubic feet in the Northwest Territories, and 8 trillion cubic feet in Yukon.

Diversification

Tourism is a growing sector across the North with significant opportunities for Indigenous tourism operators. The North's one-of-a-kind experiences can be located in smaller communities which need investments to enhance their facilities and services in order to be full-service tourism destinations. In the coming years, the North is expected to see an increase in the number of cruise ships.

There is strong desire and need to increase local food production and systems—agricultural goods, country foods such as seal, caribou and muskox, and fisheries—in order to reduce the North's reliance on imported foods, reduce food insecurity, and increase local employment and create vibrant export businesses.

The traditional economy (trapping, sealing, and arts and crafts) of the North is important for many Northerners in that these activities allow them to be self-employed, work on the land, continue cultural practices, and offer a source of income in small communities which have limited economic opportunities.

Innovation

Many areas within the North have a strong entrepreneurial spirit – Yukon (57.3) and the NWT (48.5) have more SMEs per capita than the Canadian average (39.2). The territories are looking to develop innovative technologies and sciences to enhance its economy. The mining industry is an essential part of the development of new technologies and is also a technologically advanced sector. Leveraging anchor institutions, like the Inuvik Satellite Station Facility, the new Yukon University and the Canadian High Arctic Research Station, could help spur the growth of the North's small innovation ecosystem.

Operations

CanNor's grants and contributions programs provide funding to support the development of key economic sectors such as community and business development, mining, tourism, fisheries, cultural industries.

By conducting outreach and pathfinding activities, through offices in each territory, CanNor enhances its support to clients as they navigate the economic development services and programs available to assist them. The Agency also proactively seeks out and leverages alternative funding sources from across government, and refer and connect clients seeking access to other funding options.

Key grants & contributions programs

Northern Projects Management Office (NPMO)

NPMO was established in 2010 to improve the coordination of federal regulatory departments during the federal environmental review process for proposed resource development and infrastructure projects in the territories.

Large resource development and infrastructure projects are primary drivers of the northern economy, creating employment and business opportunities, and generating tax revenues that benefit Northerners and all Canadians.

NPMO's functions include:

• enhancing pathfinding role for businesses investing in this sector;
• coordinating federal departments' participation in territorial environmental review processes through the Northern Projects Management Office;
• providing issues management in relation to the regulatory processes for Indigenous organizations and industry proponents; and
• overseeing and coordinating Crown consultations in relation to major projects.

Policy & Advocacy

CanNor provides strategic and program policy advice with regard to economic development, diversification, and opportunities in the North. It also champions the economic interests of the North within and outside government, while providing an evidence-based Northern lens to contribute to overall federal policy and decision making.

In fulfilling these roles, CanNor:

• represents Northern voices in federal development process and in international fora;
• convenes federal departments and partners in northern and southern Canada to respond to economic challenges and opportunities in the North
• conducts research and program evaluations to support the development of evidence-based policies; and
• develops advice to the Minister, and delivers reports to Parliament.

CanNor's policy development is informed by its sectoral research and analysis, close working relationships with key stakeholders and other government departments, and CanNor's own work in the North.

Pilimmaksaivik (Federal Centre of Excellence for Inuit Employment in Nunavut)

Pilimmaksaivik – an Inuktitut term chosen by federal Inuit employees, meaning 'a place to develop skills through observations, mentoring, practice, and effort' – was established in May 2016 as a response to the Government of Canada's commitment (under Article 23 of the Nunavut Agreement) to employ Inuit within Nunavut at a level commensurate with their demographic representation.

CanNor operates Pilimmaksaivik on behalf of eleven Government of Canada departments and agencies with legal obligations. Based in Iqaluit with reach across Nunavut, Pilimmaksaivik is a one-window, whole-of-government service centre that is culturally sensitive and provides excellence in recruitment, employment, development, and retention of Nunavut Land Claim beneficiaries.

Aurora Geosciences Geo-Sensing Innovation Project – Yellowknife, NWT

A system that identifies new mineral deposits is improving exploration for mineral resources in the North. With support from CanNor, Aurora Geosciences Ltd (AGL), a Yellowknife-based exploration services company, re-engineered commercially available capacitively-coupled resistivity equipment to enable the equipment's signal to penetrate deeper into the ground.

The original system was pioneered by AGL and was recently used to discover diamond-bearing kimberlite rock at an exploration project in the Northwest Territories. Towed by snowmobile over frozen tundra, the improved technology will significantly reduce exploration costs in comparison to traditional ground resistivity surveys.

Smart ICE Technology Adaptation – Pond Inlet, Nunavut

Northern activities such as fisheries, shipping, tourism, and subsistence hunting depend on accurate sea ice information. However, the lack of real-time information can endanger those working and traveling on the ice. SmartICE uses sensors mounted on a qamutik (sled) to measure ice thickness. This information, combined with Inuit traditional knowledge, feeds into community-maintained maps to assist in planning safer travel.

CanNor funding supported SmartICE adapting technology for use in temperatures below –30°C by hard wiring positioning and measuring sensors and includes insulation, heaters, and a simplified interface easily used with bulky gloves. Data will show how climate change is affecting the northern environment and how communities are adapting.

Northlight Innovation Hub – Whitehorse, Yukon

Northlight Innovation is a brand new 24,000 square foot facility located in downtown Whitehorse managed and operated by local non-profit Yukonstruct. This facility is a gathering place for entrepreneurs and innovators, who have access to cutting edge manufacturing equipment, educational workshops, a collaborative co-working environment and business support services.

CanNor funding supports renovation and construction of interior displays, along with start-up costs for the first two years to build the capacity of the Society and implement the systems needed to enable future sustainability.

Northlight Innovation is a shared space between the YukonStruct Society, Yukon College, the Yukon Development Corporation, and other private businesses and not for profits. By bringing together players from across the innovation ecosystem, Northlight Innovation provides Yukoners a place to grow ideas into commercial products.

Opportunities

• Strength of the mining sector will lead economic growth in the short and medium term
• Large youth population has the potential to meet future labour force needs
• Growing tourism sector resulting from increase of cruise-ship visits

Challenges

• Limited infrastructure, such as lack of road transportation and broadband less than 50Mbps download speed, is increasing the cost of living and doing business
• High unemployment rates, especially outside the territorial capital
• New jobs created in Nunavut's mining industry will primarily go to non-residents due to the shortage of specific mining skills in the resident population

Strategic CanNor investments

• Skills development: A Regional Training Centre ($10M) in Pond Inlet will be constructed to support the development of a conservation economy in Qikiqtani region.
• Infrastructure: The Kivalliq Inuit Association is undertaking the technical and feasibility study ($1.6M) on the potential to develop a hydroelectric and fibre-optic link between the province of Manitoba and the Kivalliq region of Nunavut.
• Resource development: The Canada-Nunavut Geoscience Office will conduct new geoscience research ($3.3M) related to natural development, infrastructure, climate and permafrost change.
• Diversification and innovation: The Government of Nunavut will undertake a project ($2.5M) to conduct fisheries research and to increase community capacity to advance Nunavut's fisheries sector.

Opportunities

• Development of the Taltson Hydroelectric Corridor spurring new mining projects in the Slave Geological Province
• Inuvik-Tuktoyaktuk all season highway connecting to the Arctic Ocean (increasing tourism opportunities)
• New metal mines opening (Canadian Zinc's 2020)

Challenges

• Long-term economic outlook is slumping due to reduced diamond mine production (e.g., majority of the production to slow by 2030)
• Shrinking labour force due to outmigration and aging population
• Climate change affecting seasonal roads needed for mining (i.e., unstable ice road seasons)

Strategic CanNor investments

• Skills development: The Nunavut Fisheries and Marine Training Consortium, a company which provides training in marine industry in Nunavut, NWT and Nunavik, is expanding and enhancing its training facility ($800,000) in Hay River.
• Infrastructure: The GNWT is conducting feasibility and engineering study work for the Taltson Hydroelectric Expansion Project ($480,000), delivering 60 megawatts of clean energy to the North Slave hydroelectric system.
• Resource development: CanNor is supporting the Slave Geological Province Geoscience Exploration Development Initiative ($2.4M) to identify new mineral resources in the region.
• Diversification and innovation: Northwest Territories Tourism is undertaking a project ($1.6M) for tourism marketing activities in targeted markets, conducting market research and adopting enhanced web-based tools.

Opportunities

• Tourism is a growing industry with partnership potential
• Well-developed road network with access points to British Columbia, Alaska and an all-season highway which crosses the Arctic Circle
• Forecasted unemployment rate below 4% with strong wage growth
• Real mineral production is expected to increase by 81% in 2020 due to the Eagle Gold Project. Other mines are also on the horizon, driving growth long term.

Challenges

• Labour shortage due in part to an aging population
• Limited access to larger capital markets compared to provinces

Strategic CanNor investments

• Skills development: Na-Cho Nyäk Dun Development Corporation is developing a project ($230,000) to support seed collection, germination trials and training/capacity development for mine reclamation.
• Infrastructure: Carcross Tagish Management Corporation is building a manufacturing facility ($1M) to construct pre-fabricated residential unities for the Yukon market.
• Resource development: Yukon Geological Survey is embarking on a project ($750,000) to support geothermal research, public data systems, community awareness activities and geophysical data processing.
• Diversification and innovation:
  • Yukon College is developing a Cold Climate Innovation Centre Building ($1.7M) to support the research, prototype development and pilot testing of innovation and clean technology projects by small Yukon start-ups and entrepreneurs.
  • The YuKonstruct Makerspace Society created the Yukon Innovation Hub ($1M). This Hub represents the first innovation cluster north of 60.