Frozen Yukon money a low-risk investment: finance official

While Yukon Premier Dennis Fentie sat in the hot seat Wednesday over $36.5 million in public funds presently frozen in an investment, a finance official said the investment is not as high-risk as critics claim it to be.

Opposition politicians spent this week grilling Fentie, who is also the finance minister, over the 30-day asset-backed commercial paper currently sitting in the global credit market since it froze in mid-August.

It will take at least another month before any word comes on how or when the territorial government's $36.5 million may be recovered.

Critics charged that Fentie's government is gambling with taxpayers' money, but he and top finance officials have insisted that the investment is low-risk, making it a safe place to park the Yukon's surplus.

"It was actually a low-risk investment with a low return, comparable to Government of Canada treasury bills within a quarter of a percent," deputy finance minister David Hrycan told CBC News on Wednesday, adding that it was earning a modest 4.75 per cent.

Market freeze a 'blip'

Hrycan said investments in similar funds have been earning the Yukon government millions of dollars over the past five years.

He called the recent trouble in the credit market a once-in-a-lifetime event, that no one could foresee.

"It definitely was a blip in the market," he said.

"Do we have an explanation for it? We're not the experts in the global economy, but certainly it's a global situation."

The Yukon's frozen investment represents about 0.1 per cent of the billions of dollars at stake in the global credit market crisis.

Fentie said he is confident he will be able to recover the money, although it will be done later than originally anticipated.

Still, critics like Liberal and NDP opposition MLAs and the Canadian Taxpayers Federation accused Fentie of using public money to gamble on what they said are high-risk investments.

"The government has to remember that it's not their money, it's taxpayers' money. And when you have surpluses like this, that money should be turned back over to taxpayers, and let them make their own investment decisions," said Scott Hennig, the Alberta director with the taxpayers' federation.

"It doesn't seem all that smart to be sitting on taxpayers' cash when they could have it in their pockets."

Hennig added that even if Fentie does collect the entire $36.5-million amount, taxpayers will still see a loss because the money could have been put into guaranteed government bonds, where it would still be earning interest.