At the conclusion of Premier Brad Wall's speech to the Estevan Chamber of Commerce on March 28, a man much smarter with number sthan I pointed out something rather interesting about the provincial budget. While most of the media attention has been about the cutting of the provincial film tax credit, it was a miniscule part of the budget. All the important stuff had gone unnoticed.
I, too, got caught up in that feeding frenzy last week, slagging an industry that relies on, even demands, large tax subsidies to survive. It was simply too easy to write about. But my smart friend and I wondered aloud if it was a red herring to drag across the trail of the rest of the budget.
How insignificant was the film tax credit cut? At $8 million, it is about 14.9 hours of provincial health care funding - enough to cover a little more than one 12 hour shift in all the hospitals, long term care facilities and doctors' offices. As far as drops in the bucket go, this was a small one.
Compare that to the $217.6 million (4.9 per cent) increase in health care funding, with a total of $4.7 billion. Does this include additional funding for the Saskatchewan Union of Nurses contract, currently under negotiation? And did anyone notice health care is now 41.8 per cent of the budget?
Some may think potash is king, but it's oil that is paying the bills. With oil pegged at US$100.50 per barrel of WTI crude, the expected royalties are $1.6 billion. That's as much as we will get from federal transfer payments. Potash, however, is expected to bring in $705.2 million, with KCL princes pegged at US$464 per tonne.
As evidenced from last fall's provincial election, the election promises were small, and the expenditures to support them were as well. Yet total expenses are anticipated to be up $507.6 million, to a total of $11.2 billion. Revenue is anticipated to be $11.29 billion.
This had Wall pointing out, quite rightly, that Saskatchewan is going to be the only province in Canada to post a surplus this year. But it's not that big of a surplus - just $95 million of revenue in excess of expenses, and a summary financial statement surplus of $14.8 million.
If potash prices pick up, we could see a much larger surplus. But if oil prices drop precipitously, like they did in 2008-09 following the last time we saw prices near today's level, we are in serious trouble. Even if they drop 10 per cent on average, something we can easily see happen in a week, we lose a lot of dough. There's not a lot of wiggle room built in despite the volatile nature of a commodity-based economy. We could of course pull from the fiscal stabilization fund, essentially going into deficit, but it would be best to avoid that option.
One of the things I noticed was the government's abandonment of a major campaign plank in the 2007 election, killing off the Enterprise Saskatchewan region offices. I've had a fair bit of interaction with the local enterprise region, which spent the bulk of its efforts on housing. In particular, they were working with municipalities to get their housing strategies in place. However, one municipal official told me it was a lot of study into something that was self-evident - we need more housing. He wasn't sorry to see the enterprise regions go.
The net result is the provincial government, through its elimination of regional economic development authorities and then enterprise regions, has essentially abandoned a provincial role in local economic development.
There was more going on in this year's provincial budget than the drama over dramas. Let's just hope the predictions of a balanced budget pan out, and we can show the rest of the country how it is done.
- Brian Zinchuk is editor of Pipeline News. He can be reached at [email protected]
