Nunavut Housing Corp. overrun stuns MLAs

Some Nunavut MLAs say they're stunned and disturbed to hear the Nunavut Housing Corporation faces $50 million more in cost overruns, on top of the $60 million in unbudgeted spending it announced this spring.

Housing Minister Tagak Curley said this week that budget miscalculations — mainly on the cost of labour and supplies — mean the housing corporation needs another $50 million to meet its commitment to build new public housing units under a federal program.

The amount is in addition to the $60 million in cost overruns the housing corporation announced in May. At that time, officials cited poor budgeting and expenditure tracking, as well as high labour costs.

"We didn't anticipate that, given the information that was given to us in the spring," Nanulik MLA Johnny Ningeongan said of the latest budget shortfall on Thursday. "It didn't take very long for the number to escalate up to $110 million.… We were basically stunned to hear that."

Fuel, labour costs surge

Curley blamed the latest miscalculation mainly on fuel prices and labour costs that doubled or even tripled original estimates.

"The contracting management that we have in Nunavut certainly will have to be adjusted in some ways to reflect that we hire more local people," Curley told reporters in Iqaluit on Wednesday. "Continuing to import [the] majority of the labour force for construction work is very costly."

Housing corporation officials say they have determined that the additional $50 million would be needed once all the construction contracts are awarded.

After the Nunavut Housing Corp. revealed the first round of cost overruns, Nunavut MLAs approved $60 million in supplementary appropriations in June, mainly by cutting costs across various departments.

Now facing the additional $50-million shortfall, Curley said the territorial government agency can free up as much as $11 million of that amount, mainly by delaying the purchase of new vehicles and suspending its home renovation program.

The Nunavut government has committed to fund the remaining $39 million without going into debt, Curley said. "The minister of finance agreed to that," he said. "Currently they are looking where to supply that. But the thing is, $50 million is approved."

Program cuts feared

Curley he said he is confident the additional funding will enable the housing corporation to meet construction deadlines for public housing units.

But Nattilik MLA Jeannie Ugyuk said she fears community programs and services may get cut or suspended as a result of the bailout for the housing corporation.

"When I first started this spring, my first session was cut, cut, cut, and I had no chance to look at any new initiatives.  So I can't give anything to my constituents," said Ugyuk, who was elected in a byelection in April.

Ningeongan said he and other non-cabinet MLAs do not deny that more housing is needed but they are determined to prevent further budget problems at the Nunavut Housing Corporation.

"We really ought not to hear any more requests in that regard because $110 million is a lot of money, and a lot of that could have been put towards programs in the communities," he said.

The Nunavut Housing Corporation's financial woes are sure to be a hot topic when MLAs reconvene for their fall session on Oct. 19. Ningeongan said MLAs plan to review an audit of the agency, and then will decide whether a forensic audit or inquiry is needed.