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The answer to the social problems crippling Canada's North lies in economic development, Prime Minister Stephen Harper says.

Mr. Harper formally unveiled the federal government's new economic development office in Iqaluit, the Nunavut capital where two young boys were photographed sleeping on the pavement in what the Prime Minister called a “terrible, tragic” image of the social issues plaguing the North. These crises exist everywhere in Canada, Mr. Harper said, but they can be solved with the help of an economic development office his government is establishing in Iqaluit.

“The first and most important aspect of addressing these problems is economic opportunity,” he said. “It's certainly not the only solution, but obviously, you know, where economic opportunities are wanting, where economic needs are greatest, you do tend to find these problems more so.”

An economic development strategy and an agency to spearhead that will help, he added.

Snapshot of a young population in crisis

Natan Obed of the advocacy group Nunavut Tunngavik takes your questions on social problems in the north

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The Canadian Northern Economic Development Agency, or CanNor, was part of the Conservatives' 2008 election campaign and was first announced in January. It has a budget of $50-million over five years.

Tim Gardiner, director of northern development for Indian and Northern Affairs and one of the primary people behind the office, has said he would like it to go further in facilitating large-scale investments such as mining projects.

The resource-rich North has seen extensive interest from mining companies, but projects have been stymied in large part thanks to the high cost of operating and the slow licensing process.

But economic development can't be regarded as a panacea, argued Northwest Territories NDP MP Denis Bevington.

“In the Northwest Territories, we've had a great deal of economic development growth over the past decade – our GDP [per capita] is higher than any other province or territory. ... Yet you can go to Yellowknife today and you can find many, many homeless people, many young people that are on the streets.

“So I don't think that's the complete answer.”

Mr. Bevington said he thinks there was insufficient consultation prior to the office's creation, which doesn't bode well for its role in liaising with local communities to set priorities for economic development.

The entrenched problems facing Iqaluit and the rest of Nunavut are precisely what make it so important to base a development office there, Mr. Harper said.

“Senior officials gave me a million reasons why we should not do it in Iqaluit as opposed to the others. And they all had to do with reasons of the development challenges here ... it's much more difficult to house an agency here, create an agency here, staff an agency here, overcome all kinds of technical problems,” he said. “Why don't we as a federal government face that directly by putting the agency where the challenges are the greatest and overcoming them ourselves?”

The formal establishment of the office was greeted as a positive and much-needed step for the region.

Paul Kaludjak, president of Nunavut Tunngavik Incorporated, the group representing the Nunavut Inuit's land claim, said he hopes the office will be a catalyst for badly needed investment, infrastructure and jobs.

“We've been long aware of the process and we look forward to building policies and programs along that line ... to make sure it's relevant to the Inuit of Nunavut,” he said. “[The office] has to serve its purpose and the mandate has to reflect what's needed in the territory. ... On many occasions Nunavut and Inuit are not understood, and I hope [Harper] does.”

Mary Simon, leader of the national group Inuit Tapiriit Kanatami, said she worries Mr. Harper's focus on the economy fails to address shortfalls in health and social services for Inuit.

“Before you can have true economic development you have to have a healthy, viable population,” she said. “For me, that picture [of the two boys], which is probably not an isolated incident, speaks to the need to have some fairly urgent fixes.”

But Ms. Simon said on this trip, Mr. Harper's sixth since coming to office in 2006, the Prime Minister seems to have a better understanding of the region.

“I think he's talking more about the people this time around,” she said. “He's getting a sense that it's not just about the military exercises.”

Part of the thinking behind establishing an economic development agency based in the North, Mr. Harper said yesterday, is to ensure the office “will have lots of intelligence on local priorities when it makes its decisions.”

Both Ms. Simon and Mr. Kaludjak said there's a desperate need for more and better culturally specific social services for Inuit in the North. A dozen such programs in Nunavut, run by the Aboriginal Healing Foundation, are in jeopardy as the federal grants given to them under the government's residential schools settlement are set to run out in 2010.

David Wilman, is executive director of Tukisigiarvik, an Iqaluit-based organization that offers Inuktitut-language counselling to about 5,000 people a year. He says if the group's federal funding runs out next March, it will have to close.

“Without a significant source of income from somewhere, we can't do it and we don't have the resources. You couldn't run a program like this on bake sales.”