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Nunavut is facing "a moment of crisis" just seven years into the much-heralded creation of Canada's third territory, suffering from high unemployment, a 75-per-cent school dropout rate and a host of social ills.

A final report on the Nunavut Land Claims Agreement released yesterday blames the education system for failing to produce literate youth, which has in turn allowed a situation in which non-Inuit outsiders land most top government jobs.

The report from former B.C. Supreme Court Justice Thomas Berger found only 45 per cent of the Nunavut government's 3,200 employees are Inuit, in spite of a promise from Ottawa that the territory's 85-per-cent Inuit population would be reflected at that exact level in government.

Other findings in the report include:

Only 25 per cent of Inuit students graduate from high school.

Rates of suicide, smoking, sexually transmitted diseases and tuberculosis far exceed national averages.

A special program to increase the number of Inuit teachers is only graduating between eight and 12 a year, failing to meet demand.

Arctic warming can be seen everywhere in Nunavut, raising questions of sovereignty, mining exploration and the effect of shifting migration patterns on animal harvesting.

The federal government appointed Mr. Berger last June to update the progress of governments in living up to their promises in the 1993 Nunavut Land Claims Agreement, which remains the largest land-claims settlement of the modern era.

Mr. Berger found that the Nunavut government "strived mightily" to find jobs for virtually all qualified Inuit in the territory of nearly 30,000 people.

"The problem is that the supply of qualified Inuit is exhausted," states the report. Not only do just one-quarter of Inuit children graduate from high school, but fewer go on to higher education, effectively ruling out most young Inuit from the better-paying management jobs in which Inuit are vastly under-represented.

Although Nunavut Premier Paul Okalik has said the Inuit are in a transition stage from a land-based economy to a modern wage-based economy, the report bluntly concludes that such an economy does not exist.

"In Nunavut there is no developed wage economy, no industry. Unemployment is high, averaging 30 per cent but reaching 70 per cent in some communities. . . . Thus the importance to the Inuit of the Government of Nunavut as employer," it states.

One of the report's main recommendations is to end the current practice of teaching students entirely in Inuktitut until Grade 4 or 5, at which point the language of instruction switches entirely to English.

"It is a bilingual system in name only, one that produces young adults who, by and large, cannot function properly in either English or Inuktitut," writes Mr. Berger, who recommends both languages be taught throughout elementary and secondary school.

But the dysfunctional approach to language is not the only hurdle facing Inuit students, says the report, which cites an example of a common living environment.

"Imagine the odds faced by a student attempting to do homework with 12 or 13 other people in the house," it states, noting that the territory's tiny homes must be shut tight for eight months of the year against the Arctic cold and that virtually every home has at least one smoker.

"The fact that even one-quarter of Inuit students graduate from high school is, under the circumstances, a testimony to the tenacity of those students."

Federal Indian Affairs Minister Jim Prentice said yesterday that he was still studying the report, which he received March 1, but appeared to pour cold water on any chance of Ottawa sending more money.

"Significant sums are spent already on that education system. It involves at this point in time some of the highest per-capita student expenditures in Canada," he said.

"The very high dropout rates amongst children in Nunavut are a real cause for concern. . . . I simply point out it's not simply a question of spending money, and we're also dealing with an area of territorial jurisdiction."