The Canadian Taxpayers Federations says a key component is missing as the province enjoys a resource-fuelled surge in revenue.
When farmers have a bumper crop, they do three things.
The machinery that’s been held together with bailer twine gets new parts. The credit line gets paid down to keep the bankers off their backs. And then it’s time to sit down and make a plan for next year that might get blighted by hail or low prices.
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Saskatchewan Finance Minister Donna Harpauer just announced the budgetary versions of the first two things on the list, but there’s still homework left on Step 3.
The news came with the province’s first-quarter update. Soaring oil and potash prices have pushed provincial revenues way up. Those revenues are so far up that the province’s projected operational deficit of $463 million is slated to be erased and replaced with a $1.5-billion surplus.
It’s worth noting that none of the progress on the bottom line is due to spending restraint. Five of 11 major spending areas, including health and education, are already over budget, compared to only three that are under budget.
Harpauer would no doubt admit she’s benefiting from good luck, but she using some of that luck well.
First, she’s putting money back in taxpayers’ pockets.
Every adult in Saskatchewan is getting $500. The cheques will be in the mail soon.
Critics will pooh-pooh such a simple move, but they ignore a key fact: This money belongs to taxpayers. If the government has more money than it needs, it needs to give it back to the people it belongs to.
And, while families struggle with inflation levels not seen in nearly 40 years and pandemic aftermath, these rebates will do a lot of practical good.
Harpauer went further by reversing some of the last budget’s sales tax expansion and extending the tax holiday on small businesses. It’s a great way to help the economy. Saskatchewanians will have more money to spend and small businesses will have more room to grow.
That will help the machinery of Saskatchewan’s economy get back on track.
But Harpauer looked way beyond the present and to help our kids and grandkids by planning to pay back up to a billion dollars of government debt.
That move pays an immediate dividend of lowering interest costs. In fact, that’s one of the three expense lines that’s now under budget. And debt repayment is desperately needed as Saskatchewan’s debt has soared from $7.7 billion in 2017 to $14.2 billion in 2021.
Now we need to talk about that homework for the future.
Farmers who want to keep farming use good years to prepare for bad ones.
Saskatchewan governments have consistently failed to learn this lesson. When non-renewable resources soar, they’re deemed the “new normal” and spending soars too. When those non-renewable resources revenues come back down, spending continues to grow and debt fills the gap.
It’s great to pay down debt with a windfall, but Saskatchewan needs a coherent debt repayment schedule. This isn’t financial wizardry. It’s what every family does when they make monthly mortgage payments.
Let’s imagine Harpauer’s first-quarter prudence becomes a long-term habit that brings us to a debt-free Saskatchewan.
Saskatchewan needs a plan for non-renewable resource revenues.
Norway has deposited its oil revenue in a sovereign wealth fund for decades. It now has $1.5 trillion in the bank.
Former premier Brad Wall commissioned a study on a heritage fund in 2012. It’s collected dust for a decade.
We need to learn our lesson.
The Saskatchewan government is doing better this time by putting money back in families’ pockets and paying down debt. Now we need a long-term plan to pay down debt and put away non-renewable resource revenues for the future. Let’s get that homework done.
Todd MacKay is the vice-president of communications for the Canadian Taxpayers Federation.
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