Up There: Canada gave the Territories responsibility but…

Canada talks about the North as though it were the country’s next great strategic frontier. But we govern it as though it were an expensive collection of federal programs.

The territories are expected to manage growing communities, unlock critical minerals, support continental defence and demonstrate Canadian sovereignty across nearly 40% of the landmass of our country. Yet they remain dependent on Ottawa to approve, fund and frequently announce much of the infrastructure, big and small, required to do any of it.

This is not simply a funding problem. It is a governance problem, hiding.

The territorial governments look familiar. They have elected legislatures, premiers, cabinets and public services. But they are not provinces. Their powers have been delegated and expanded through federal statutes and devolution agreements, while their fiscal capacity remains fundamentally different. They govern enormous geography, tiny tax bases and some of the highest development, construction and service-delivery costs in Canada.

The Territorial Formula Financing program is essential. It recognizes that Yukon, the Northwest Territories and Nunavut cannot provide reasonably comparable public services as the provinces can from their own revenues alone. But it is principally designed to sustain government, not transform an economy. It helps keep the lights on. It does not, by itself, finance the ports, roads, power systems, housing and telecommunications networks that could profoundly change the North’s economic prosperity.

The result is a peculiar form of decentralization: Ottawa has steadily transferred responsibility northward while retaining much of the financial leverage required to exercise a given ambition.

Devolution has unquestionably advanced northern decision-making. Yukon assumed responsibility for most public lands and resources in 2003. The Northwest Territories followed in 2014. Nunavut signed its lands and resources devolution agreement in 2024 and is now working through implementation. These are important transfers of authority. But control over land is not the same as the financial ability to develop, build and operate whatever is prioritized.

A territorial government may identify a strategic road, port or power project. An Indigenous government may support it. A private investor may see a viable long-term opportunity. Yet the project can still wait years for federal programs, departmental approvals and political announcements. 

Authority has moved to our North faster than capital.

Modern treaties make this picture more sophisticated, not less legitimate. Much of northern Canada is governed through constitutionally protected agreements that define rights, establish institutions and shape how land and resources are managed. Indigenous governments and treaty organizations may be rights holders, landowners, regulators, investors and project partners at the same time.

Too often, southern observers describe this as a layer of complexity. That is the wrong diagnosis. Modern treaties are not administrative obstacles sitting between Ottawa and development. They are part of the governing architecture of the North. They provide legitimacy, local knowledge and a foundation for Indigenous ownership.

A northern project can cross Crown land, settlement land and municipal boundaries; involve territorial, Indigenous and federal authorities; and depend on public benefits that cannot be captured by a single private balance sheet. Ottawa then asks the proponents to navigate separate programs with different timelines, criteria and fiscal-year pressures. We call the result partnership. In practice, it can resemble institutional congestion.

Canada now wants northern infrastructure to perform several national functions at once. A port may serve a community, enable mineral development and support defence. A fibre line may improve local services while strengthening security and emergency response. An all-season road may reduce the cost of living, connect resources to market and make sovereignty tangible.

These are nation-building assets. They should not depend on whether a narrow funding program happens to be open this year.

The answer is not to turn the territories into provinces by rhetorical decree. Nor is it to weaken modern treaties or concentrate every decision in a territorial capital. 

Canada needs a new northern financial institution that matches responsibility with financial capability and reflects the shared governance that already exists. A bank in the North, for the North.

This institution should provide predictable, multi-year capital allocations outside the annual scramble for departmental funding. It should give territorial governments greater borrowing flexibility for revenue-producing infrastructure, backed where appropriate by federal guarantees that reduce financing costs. It should fund the early engineering, environmental and commercial work needed to turn good ideas into investable projects with predictability, not political outcomes, as the expectation. And most importantly, Indigenous governments and modern-treaty organizations should help govern the system.

Fo now, I call it the Arctic Infrastructure Finance Authority, the AIFA, (I made this concept up and gave it the name but it remains a legitimate idea!) 

The AIFA could bring these elements together: institutional credit strength, territorial priorities, Indigenous rights and ownership, institutional capital with the patience to invest in Arctic conditions and a uniquely northern portfolio thesis.

For decades, federal policy has treated the North’s dependence as an unavoidable consequence of geography. Geography is certainly expensive. But dependence, and risk, is also produced by administrations. A government that cannot reliably finance the infrastructure beneath its own policy ambitions is not fully empowered.

The Canada Infrastructure Bank is a powerful tool, as is the Major Projects Office. And don’t get me wrong here, I support our Prime Minister’s effort and the work of the federal and territorial governments on initiatives such as the investment attraction summit.

But maybe what we need to think about is making good intention enduring.

Canada says it wants a secure, prosperous and self-determining North. But we have said this before. And before that. And before that. Achieving it, once-and-for-all will require Ottawa to surrender something it has been far more reluctant to devolve: control of the chequebook.

So, let’s start a bank!

Joking. Not joking.