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
Canadian gov't proposes new foreign influence registry as part of wide-spanning new bill
Prime Minister Justin Trudeau's government is proposing a suite of new measures and law changes aimed at countering foreign interference in Canada, amid extensive scrutiny over past meddling attempts and an ever-evolving threat landscape.
Boeing Starliner capsule's first crewed test flight postponed
The long-awaited first crewed test flight of Boeing's new Starliner space capsule was called off for at least 24 hours over a technical issue that launch teams were unable to resolve in time for the planned Monday night lift-off.
Teacher charged in historical sexual assault of Calgary teenage girl
Calgary police have charged a teacher with the alleged sexual assault of a teenage girl more than 20 years ago.
Winnipeg man admits to killing four women, argues he's not criminally responsible
Defence lawyers of Jeremy Skibicki have admitted in court the accused killed four Indigenous women, but argues he is not criminally responsible for the deaths by way of mental disorder – this latest development has triggered a judge-alone trial rather than a jury trial.
Man banned from owning animals after fatal Calgary dog attack
The owner of three Calgary dogs that got loose and mauled a woman to death in 2022 has been ordered to pay a $15,000 fine within one year and banned from owning any animal for 15 years.
East-end Ottawa family dealing with massive rat infestation
Residents in Ottawa’s Elmridge Gardens complex are dealing with a rat infestation that just won’t go away. Now, after doing everything they can to try to fix the issue, they are pleading with the city to step in and help.
Mediterranean staple may lower your risk of death from dementia, study finds
A daily spoonful of olive oil could lower your risk of dying from dementia, according to a new study by Harvard scientists.
An El Nino-less summer is coming. Here's what that could mean for Canada
As Canadians brace themselves for summer temperatures, forecasters say a weakening El Nino cycle doesn’t mean relief from the heat.
Newfoundland and Labrador latest province to tighten rules on Airbnbs
Newfoundland and Labrador is the latest jurisdiction to bring in stricter rules for short-term rentals, with a coming set of regulations that will force operators to register with the provincial government.