Addressing the Cost of Living in Nunavut Discussion Paper Four Prepared for the Nunavut Employees Union By: Alison Rogan April 2003 Addressing the Cost of Living in Nunavut TABLE OF CONTENTS Executive Summary ......................................................................................................1 Key Findings ..............................................................................................................1 It Costs More to Live In Nunavut...............................................................................1 What We Value ......................................................................................................2 How Nunavummiut Spend .......................................................................................2 Factor Costs..........................................................................................................4 The Government of Nunavut’s Equalization Allowance: Does It Cover The Higher Costs of Living? .................................................................................................................7 Conclusions...........................................................................................................7 1 - Introduction ............................................................................................................9 What this Discussion Paper Tries to Accomplish................................................................9 The Equalization Concept .............................................................................................9 Where the Equalization Concept Comes From................................................................. 11 Key Values and Objectives of the Government of Nunavut................................................ 11 Comparison of the Governments of Canada and Nunavut ............................................ 13 2 –An Appropriate Equalization Payment .....................................................................15 How Nunavummiut Spend Their Money ......................................................................... 15 Food and Shelter.................................................................................................. 15 Household Operations, and Childcare ....................................................................... 18 Personal Care and Clothing .................................................................................... 20 Transportation ..................................................................................................... 20 Education, Reading and Recreation ......................................................................... 21 Summary ........................................................................................................... 22 Costs of Living.......................................................................................................... 23 Cost of Food........................................................................................................ 24 Consumer Goods.................................................................................................. 26 Shelter............................................................................................................... 26 Transportation ..................................................................................................... 28 Access to Services................................................................................................ 30 Adjusting for Income Tax ...................................................................................... 31 Summary ........................................................................................................... 34 3 – Equalization Payments of Nunavut’s Major Employers ............................................37 The Federal Government ............................................................................................ 37 Environment Allowance......................................................................................... 37 Cost of Living ...................................................................................................... 37 Fuel and Utilities Allowance.................................................................................... 37 Travel ................................................................................................................ 38 Summary – Federal Government ............................................................................ 38 Nunavut Tunngavik Incorporated ................................................................................. 38 April 2003 Addressing the Cost of Living in Nunavut Summary – Nunavut Tunngavik .............................................................................. 39 The Government of Nunavut ....................................................................................... 39 Travel Costs........................................................................................................ 41 Food Cost Allowance............................................................................................. 42 Sea Lift and Air Freight Allowance........................................................................... 43 Electricity Allowance............................................................................................. 43 Gasoline Allowance............................................................................................... 44 Access to Government and Non- Government Services ................................................ 44 Adjustment for After-Tax Income ............................................................................ 46 Summary – Government of Nunavut ....................................................................... 46 Summary: Equalization Payments................................................................................ 47 4 – Conclusions ...........................................................................................................52 Appendix A .................................................................................................................57 Factor Costs of Living: Single Employee, Homeowner.....................................................A-1 Factor Costs of Living: Single Employee, Subsidized Housing ...........................................A-2 Factor Costs of Living: Employee With One Dependant, Homeowner .................................A-2 Factor Costs of Living: Employee With One Dependant, Subsidized Housing .....................A-4 Factor Costs of Living: Employee With Two Dependants, Homeowner................................A-5 Factor Costs of Living: Employee With Two Dependants, Subsidized Housing ......................A-6 Factor Costs of Living: Employee With Three Dependants, Homeowner..............................A-7 Factor Costs of Living: Employee With Three Dependants, Subsidized Housing....................A-8 Factor Costs of Living: Employee With Four Dependants, Homeowner ...............................A-9 Factor Costs of Living: Employee With Four Dependants, Subsidized Housing ................... A-10 Factor Costs of Living: Employee With Five Dependants, Homeowner.............................. A-11 Factor Costs of Living: Employee With Five Dependants, Subsidized Housing .................... A-12 April 2003 Addressing the Cost of Living in Nunavut LIST OF TABLES Table 1: Nunavut Employees Union Equalization Payment for Homeowners ................................5 Table 2: Nunavut Employees Union Equalization Payment for Employees’ Living in Subsidized Housing ...........................................................................................................6 Table 3: Before Tax Poverty Lines ......................................................................... 17 Table 4: Higher Cost of Food in Nunavut Compared to Southern Canada ................................. 25 Table 5: Higher Costs of Consumer Goods in Nunavut Compared to Southern Canada................ 26 Table 6: Higher Costs of Home Heating in Nunavut Compared to Southern Canada for Private Homeowners and Renters ................................................................................. 27 Table 7: Higher Costs of Water in Nunavut Compared to Southern Canada for Private Homeowners and Renters ................................................................................................... 28 Table 8: Higher Cost of Gasoline in Nunavut Compared to Southern Canada ............................ 29 Table 9: Annual Cost for Airline Travel, H-Class (Hospitality or Economy) Tickets...................... 30 Table 10: Higher Costs to Access Government and Non-Government Services in Nunavut .......... 31 Table 11: Nunavut Employees Union Proposed Equalization Payment for Homeowners ............... 35 Table 12: Nunavut Employees Union Proposed Equalization Payment for Employee’s Living In Subsidized Housing.......................................................................................... 36 Table 13: Federal Isolated Posts Allowance, Treasury Board Secretariat, 2003.......................... 38 Table 14: Nunavut Tunngavik's Northern Allowance and Vacation Travel Assistance, 2003.......... 39 Table 15: Nunavut Equalization Payments: Various Agreements, 2002-2004 ............................ 41 Table 16: Government of Nunavut Average Travel Allowance Compared to Average Actual Cost per Year.............................................................................................................