Brian Zinchuk is editor and owner of Pipeline Online
Minister of Finance Donna Harpauer delivered the provincial budget on March 23, as seen above. She delivered the Q1 update on Aug. 23. Legislative Assembly of Saskatchewan
REGINA – Saskatchewan’s finances are markedly improved since the release of the provincial budget this spring – so much so that the deficit has been wiped out, a billion dollars in debt will be retired, and 900,000 Saskatchewan residents ages 18 and over will be mailed $500 cheques this fall, totaling $450 million.
Those were some of the points made by Saskatchewan Finance Minister Donna Harpauer in her first quarter fiscal update, released on Aug. 23 at the Legislature.
Saskatchewan has been the beneficiary of higher commodity prices due to the Russian war in Ukraine. Asked about that, Harpauer said, “We didn’t create the war. And yes, we are benefiting in our commodities. Commodities are benefiting and we’re not the only jurisdiction that that is.”
She noted that Saskatchewan has worked very hard to help the Ukrainian people as much as possible.
The impacts of those higher commodity prices have meant billions more for provincial revenues.
At first quarter, Saskatchewan is forecasting a surplus of $1.04 billion for 2022-23, a $1.51 billion improvement from budget, largely due to higher revenue from non-renewable resources.
At first quarter, revenue is forecast to be $19.17 billion, up $2.02 billion (11.7 per cent) from budget. This increase is largely due to a $1.86 billion increase in non-renewable resource revenue, reflecting higher potash and oil prices.
Harpauer said that $1.1 billion of that was from potash, and oil was projected to average “a little over $500 million” more.
The province is now using $625 per tonne for its average potash price for the year, and US$97.54 for West Texas Intermediate oil. However, since the beginning of August, the price of oil has been below that, with oil at US$93.64 on the day of her announcement. But it had been US$114.93 on budget day on March 23, and has fluctuated between $122.11 on June 8 to US$86.53 on Aug. 16.
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Taxation revenue is forecast to be up $536.5 million from budget, with higher income and sales tax revenue reflecting stronger than anticipated economic recovery. Other own-source revenue and federal transfers are also up from budget. Increases in revenue are partially offset by a projected $533 million decrease from budget for net income from Government Business Enterprises (GBEs) primarily due to lower investment income and higher natural gas prices.
While there were some minor announcements about PST on gym memberships, the big announcements on what the province will do with the additional money came in two forms: debt repayment and “Saskatchewan Affordability Tax Credit payments.”
“Of the surplus of $1.4 billion, up to a billion of that is going towards debt,” she said.
At first quarter, total expense is forecast to be $18.13 billion, up $508.2 million (2.9 per cent) from budget. The increase is largely due to $450 million for the one-time Saskatchewan Affordability Tax Credit payments to Saskatchewan residents.
That’s going to be a $500 paper cheque mailed to all Saskatchewan residents ages 18 and over who have filed a 2021 income tax return prior to October 30.
Harpauer expressed reticence to put surplus money into projects or programs that would require additional funding in later years. Asked why the money wasn’t put into health care, for instance, she said, “You have to remember that with each and every budget, we have increased health care spending, but if we are using $450 million, based just on the oil price, and then the price drops, where do we find that $450 million next year?”
That said, the province still has been and will be expanding health care and education costs, she noted.
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Asked why Crown utility rate hikes weren’t rolled back, or provincial gasoline taxes reduced, she explained that not all people pay their own utilities, as some people have that included in their rent. And not everyone has a vehicle, plus people who use their vehicles more, such as rural people, would see more of a benefit to a fuel reduction.
“This was in, in essence, a way to distribute the funds in a very fair equitable way recognizing that all people in Saskatchewan on the resource and all people in Saskatchewan will benefit from this one time tax credit,” she said.
She didn’t think that this one-time expenditure would skew inflation.
But inflation was top of mind when it came to consideration of plowing money into infrastructure projects.
She said, “My concern with putting even more government money into capital at this point in time is, as you’ve heard, we now have $15 billion private investment that’s coming into this province. All of it, most of it is going to require considerable construction. So, we are aware that that labour for that construction is going to be difficult. It’s going to be challenging. And it’s going to drive up the cost of the construction. So perhaps now isn’t the opportune time for government to accelerate our capital plan Because then we’re competing with the private industry. We’re competing with that limited labor. We’re going to drive the cost of even more and then that does not become a cost-effective way of spending your money.
When you add up the money that was initially planned to be borrowed due to an expected deficit, the billion dollar debt retirement, and the savings of interest, the province’s debt position will improve by $1.7 billion compared to what was in the spring budget, she explained.
“The details of that are we will be retiring and not borrowing up to $1.9 billion of the operating debt, which is my most concerning debt. By retiring a billion, not borrowing $900 million, we are at this point in time for the fiscal position to borrow $130 million less for our capital plan. But the Crown corporations have informed us that they’re going to have to borrow an additional $300 million in order to meet their capital plan. So, the net of that is $1.7 billion less than budget projection. One billion of that will be actually retirement of debt.”
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NDP response
Official Opposition Finance Critic Trent Wotherspoon condemned the timing and priorities of the Saskatchewan Party’s affordability plan in a press release.
“We’ve been calling for affordability relief for months. The Sask. Party government has hidden and hoarded billions of windfall resource revenues since March, yet they still hiked taxes, fees and utility rates. Waiting until the eve of a byelection to buy votes – while families have struggled for months – is completely irresponsible,” said Wotherspoon.
The NDP critic said Saskatchewan people face crushing cost-of-living increases, and the Sask. Party’s affordability payment is a fraction of the increases in household expenses since they tabled this budget.
Families are set to spend six per cent more on sports and entertainment, and some face $200 in lunchroom fees. Next year, they will have to pay hundreds more for utilities alone. The plan announced today does not recognize the cost burden families are facing, as a childless couple is set to receive more than a single parent of three.
Wotherspoon also noted that despite receiving nearly $62 million months ago in surgery funding from the federal government, none has been allocated to deliver these services.
“The Sask. Party is giving regular people a one-time payment of their own tax dollars, while pocketing federal cash once again,” said Wotherspoon. “Instead of acting quickly to help people when they needed it most, this government is dead-set on recklessly taxing regular working people into submission, with no end in sight.”
“At the same time the finance minister wasted eight grand on a single flight to North Battleford, families had to cancel road trips just to put food on the table. The people of Saskatchewan deserve a government that doesn’t buy their trust, but earns it.”
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