The mid-year fiscal update provided by Saskatchewan Finance Minister Ken Krawetz indicates that the province is skating close to the boards and if it takes one more head shot, like last summer's flood, they could suffer an economic concussion that could substantially reduce their effectiveness.
A once healthy surplus prediction was reduced to just $25 million thanks in large part to wet weather that ruined highways and grid roads as well as knocking out bridges and reducing crops to the tune of about $250 million.
Federal mitigation funds of about $109 million will help reduce the strain, but it seems as if Brad Wall's recently bolstered government ranks will once again have to dip into the so-called rainy day fund to do the financial balancing act, albeit it will be used to reduce the debt, which has to be seen as a good thing.
The Sask. Party government is having to come up with another $100 million to finance education this year thanks to the new collective agreement and the continuation of a program that takes the heavy load of education funding off local property tax roll calls and puts them into the provincial domain.
Overall expenses will be up 2.3 per cent and we can only hope that revenues from a recovering oil patch and the continuation of healthy potash royalties will match or exceed those new expenditures. Oil prices need to stay above $95 a barrel and the oil industry, like the farmers, need to be able to get to the source of their production or else it will dip again, just as it did following last spring's floods.
In fact, revenue from the oil industry is still predicted to be down $26 million at the end of the fiscal year. The flip side of that is the fact that there is no real slowdown projected for oil and gas, as long as Mother Nature co-operates.
As expected, the now diminished NDP opposition will point to the fact that the Sask. Party may be resorting to some auditing hocus-pocus by not using the summary financial report rather than the general revenue fund in filing their financial statement. But this is an age-old battle that both sides have pulled out and used when they have found it convenient to do so, just as those on the government side have resorted to one or the other reporting style to suit their needs. As the old adage goes ... somewhere in between you'll find the truth.
What we do see on the horizon are some troubling signs that things could get out of control very quickly if this freshly strengthened Wall government falls into the proverbial political trap of entitlement and arrogance and keeps spending on Willy and Nilly while ignoring financial facts.
We can also see, however, a province that should be capable of continued modest growth, both in population and financially. Resource revenues, including increased potash and oil production and more emerging sales of uranium, gold, coal, grain, et al, make us an area to be envied.
And we should not be ignoring the soon-to-be next pocket of potential ... our research and development teams as demonstrated by the bold move forward on the clean coal file that will kick start a whole new area of revenues.
Saskatchewan can now prove to the world that we're not just a province that produces raw resources for others, but is now a province that can add value and finish to our base products. That means we have a new sense of development and technology that we can bring to the plate that wasn't there before.
These new elements can be exploited to our overall advantage, and these are things that don't show up in this financial statement, but the results should in the future.
