Sask. likely taking cautious approach with budget surplus, economics professor says
Saskatchewan is likely taking a cautious approach when it comes to the surplus announced in the 2023-24 provincial budget, according to an associate professor of economics at the University of Regina.
When Finance Minister Donna Harpauer revealed the budget on Wednesday, one of the province’s highlights was a projected surplus of $1 billion.
Jason Childs said with spending lower than last year and not much being done to immediately address ongoing affordability issues in Saskatchewan, it’s likely the government realizes much of that surplus came from a place of volatility.
“My hope is that it’s out of an abundance of caution and understanding that these revenues are highly volatile,” Childs said.
Much of the province’s current windfall is coming from non-renewable resource revenues.
In 2023-24, the province projects that potash will bring in about $1.3 billion and oil and gas around $963 million, two commodities that are highly influenced by global events, such as the conflict in Ukraine.
“Oil in particular is going to be subject to geopolitical events, so if somehow we saw a resolution to the conflict in Ukraine and Russia is allowed to re-enter the global oil export market, that can drastically change the price of oil,” Childs said.
He also said a very similar scenario could play out with potash.
“So when revenues are this unstable, building them [too much] into program spending is a really good way to borrow trouble that you don’t need.”
Childs said simply put, current and projected non-renewable resource revenue is something that could be flipped as quickly as a light switch.
“We saw something like that happen in 2014, with Saudi Arabia deciding they were going to discipline OPEC members and really try and assert their control over global oil markets by radically increasing production,” Childs said.
According to Childs, in every scenario it’s always a bad idea to build resource revenue into large amounts of program spending.
“I can’t stress that enough,” he said. “I would much rather see Saskatchewan do what Norway has done which is bank it all. Now they’re in an amazing situation in which they have this incredible sovereign wealth fund that completely insulates them from any of these fluctuations effectively.”
Childs said Saskatchewan is not in that position yet and has to spend some non-renewable resource revenue on program spending
However, he agreed the province was forced to be cautious with its spending this fiscal year.
“Yeah, and it’s really encouraging to hear the government making statements that say this revenue is likely to be transitory so we can’t build it all into program spending. That is being fiscally responsible, which is really encouraging to hear,” he said.
Childs said he was also really pleased to see the debt go down.
“So the budget for 2023 had the debt at $32.6 billion and we’re now at $30.8, that’s really encouraging. We’re seeing that debt number going in a really positive direction.”
Childs also said in the current economic environment, it is also a positive sign to see taxpayer-supported debt drop by nearly $3 billion.
“That’s a really good investment for the future because all that debt is going to roll over eventually at that higher interest rate, so our debt service costs are going to go way up if we don’t pay it down now,” he said.
CTVNews.ca Top Stories
Trend Line Anger, pessimism towards federal government reach six-year high: Nanos survey
Most Canadians in March reported feeling angry or pessimistic towards the federal government than at any point in the last six years, according to a survey by Nanos Research.
B.C. child killer's lawyer walks out of review hearing
The lawyer representing child-killer Allan Schoenborn walked out of his client's annual review hearing Wednesday – abruptly ending proceedings marked by tense exchanges and several outbursts.
'A living nightmare': Winnipeg woman sentenced following campaign of harassment against man after online date
A Winnipeg woman was sentenced to house arrest after a single date with a man she met online culminated in her harassing him for years, and spurred false allegations which resulted in the innocent man being arrested three times.
How to avoid the trap of becoming 'house poor'
The journey to home ownership can be exciting, but personal finance columnist Christopher Liew warns about the trappings of becoming 'house poor' -- where an overwhelming portion of your income is devoured by housing costs. Liew offers some practical strategies to maintain better financial health while owning a home.
Juror dismissed in Trump hush money trial as prosecutors ask for former president to face contempt
Prosecutors in the hush money trial of Donald Trump asked Thursday for the former president to be held in contempt and fined because of seven social media posts that they said violated a judge's gag order barring him from attacking witnesses.
Why drivers in Ontario, Quebec and Atlantic Canada will see a gas price spike, and other Canadians won't
Drivers in Eastern Canada face a big increase in gas prices because of various factors, especially the higher cost of the summer blend, industry analysts say.
It's the biggest election in history. Here's why few Indians in Canada will take part
In the Indian general election that gets underway on Friday, almost a billion people are eligible to vote, but a vast majority of the overseas Indian community in Canada won't be casting a ballot.
McDonald's customers left with 'zero value' collection of free hot drink stickers after company ends program
It took years for Vinnie Deluca to collect more than 400 cards worth of free McDonald's McCafe coffee, a collection that now has "zero value" after the company discontinued the program.
Getting the lowest mortgage rates in a high interest rate world
The challenges facing home buyers mean it's all the more important to do research and negotiate on rates, mortgage experts say, though they also caution that there's more to focus on than just what looks like the cheapest upfront option.