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
DEVELOPING Person on fire outside Trump's hush money trial rushed away on a stretcher
A person who was on fire in a park outside the New York courthouse where Donald Trump’s hush money trial is taking place has been rushed away on a stretcher.
Mandisa, Grammy award-winning 'American Idol' alum, dead at 47
Soulful gospel artist Mandisa, a Grammy-winning singer who got her start as a contestant on 'American Idol' in 2006, has died, according to a statement on her verified social media. She was 47.
She set out to find a husband in a year. Then she matched with a guy on a dating app on the other side of the world
Scottish comedian Samantha Hannah was working on a comedy show about finding a husband when Toby Hunter came into her life. What happened next surprised them both.
'It could be catastrophic': Woman says natural supplement contained hidden painkiller drug
A Manitoba woman thought she found a miracle natural supplement, but said a hidden ingredient wreaked havoc on her health.
Young people 'tortured' if stolen vehicle operations fail, Montreal police tell MPs
One day after a Montreal police officer fired gunshots at a suspect in a stolen vehicle, senior officers were telling parliamentarians that organized crime groups are recruiting people as young as 15 in the city to steal cars so that they can be shipped overseas.
Vicious attack on a dog ends with charges for northern Ont. suspect
Police in Sault Ste. Marie charged a 22-year-old man with animal cruelty following an attack on a dog Thursday morning.
The Body Shop Canada explores sale as demand outpaces inventory: court filing
The Body Shop Canada is exploring a sale as it struggles to get its hands on enough inventory to keep up with "robust" sales after announcing it would file for creditor protection and close 33 stores.
Tropical fish stolen from Beachburg, Ont. restaurant found and returned
Ontario Provincial Police have landed a suspect following a fishy theft in Beachburg, Ont.
U.S. FAA launches investigation into unauthorized personnel in cockpit of Colorado Rockies flight to Toronto
The U.S.’s Federal Aviation Administration is investigating a video that appears to show unauthorized personnel in the cockpit of a charted Colorado Rockies flight to Toronto.