What are resource revenue arrangements?
Resource revenue arrangements are the agreements between the governments of Canada and Yukon on how much of the revenues from natural resources activity collected by the Yukon government stay in Yukon.
What is resource revenue?
Resource revenue is money the Yukon government receives as a result of activities related to resources. Resources are natural materials that are mined, extracted and obtained from the natural environment. The revenue comes from sources such as royalties, fees, licences and permits. For example, anyone who stakes a claim in the territory has to pay a fee to the Yukon government.
What was the previous arrangement?
Up until August 2012, Yukon had one arrangement for oil and gas revenues and another arrangement for minerals, forestry, water and land revenues. Under these arrangements, the Yukon government could retain up to $3 million of revenue generated from resources such as mining and just over $3 million from oil and gas revenues.
For minerals, forestry, water and land revenues, Yukon’s grant from the federal government was reduced by a dollar for each extra dollar received over the $3 million cap.
For oil and gas revenues, the grant was reduced on a sliding scale from 60 to 80 cents for each additional dollar received over $3 million.
What arrangements are in place now?
In August 2012, the governments of Canada and Yukon amended the two existing agreements so that Yukon can keep more revenue from resources in the territory.
There are two parts to the new arrangements. The cap is now raised from $3 million to $6 million for all natural resources revenue. Because oil and gas revenue is low compared to revenue from minerals, this means Yukon can now gain up to an additional $3 million from mineral, forestry, water and land resource activity in the territory.
For example, in 2010 our revenue from mineral, forestry, water and land resources was $4.7 million which meant Yukon’s grant from Canada was reduced by $1.7 million because of the $3 million cap. This new agreement means we would have kept that $1.7 million in the territory.
The second part of the agreement gives us the option in the future to change to an arrangement where Yukon would keep 50 per cent of all resource revenues.
What resources do the new arrangements cover?
The new arrangements now cover all resources – minerals, forestry, water and lands as well as oil and gas. Before, there was one arrangement for minerals, forestry, water and lands and another arrangement for oil and gas. This makes Yukon’s arrangements more comparable to the Northwest Territories and the provinces.
Are there any other changes?
Yes. The new arrangements now cover all resources – minerals, forestry, water and lands as well as oil and gas. Before, there was one arrangement for minerals, forestry, water and lands and another arrangement for oil and gas. This makes Yukon’s arrangements more comparable to the Northwest Territories and the provinces.
Why were the arrangements changed?
The new arrangements are better for Yukon and have come at a good time for the territory with our resource industries doing so well. The new arrangements enable Yukon to maximize the benefit we get from our strong resource economy. They bring both immediate and long-term gains. The new arrangements will help us invest in healthy communities and manage our infrastructure and energy needs.
We asked the federal government for a review of the resource revenue arrangements we had with them and we are very pleased with their response to our request which resulted in this new agreement.
What are the advantages of including all resource revenues in the same arrangement?
Revenues from minerals, forestry, water, lands, oil and gas are all included under the new arrangements. The advantage of this is that all resources are treated equally and it increases the cap for revenues from all resources.
When will Yukon change from the $6 million cap to the 50 per cent option?
This is something we will consider as our revenues grow. We are better off with the $6 million cap until such time as our revenues from resources exceed $12 million. Yukon’s resource revenues are currently less than $6 million.
Which agreements were amended?
The 2003 Yukon Northern Affairs Program Devolution Transfer Agreement and the 1993 Canada Yukon Oil and Gas Accord were both amended.
What will the extra money be used for?
The increased revenue will help the Yukon government continue to invest in healthy, sustainable communities and manage our infrastructure and energy needs.
What will these changes mean for the mining, oil and gas industries?
These changes are to do with the agreement between the governments of Canada and Yukon. There won’t be any changes to the royalties or licences, fees and permits that companies already pay to the Yukon government for resource activities.
What is the Gross Expenditure Base?
The Gross Expenditure Base is an aggregate measure of the Yukon government’s expenditure needs. It is used to determine Yukon’s Territorial Formula Financing grant.
Where can I find out more about royalties paid by the resource industry in Yukon?