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
Canada Disability Benefit needs to be safeguarded from clawbacks, MPs unanimously agree
The federal government needs to safeguard the incoming Canada Disability Benefit from clawbacks and do more to ensure it actually meets the stated aim of lifting people living with disabilities out of poverty, MPs from all parties agree.
Security guard shot, seriously injured outside of Drake's Toronto mansion
A security guard working at Drake’s Bridle Path mansion in Toronto was seriously injured in a shooting outside the residence early Tuesday morning, police said.
Testifying in hush money trial, adult film actor Stormy Daniels describes first meeting Trump
Stormy Daniels took the witness stand Tuesday at Donald Trump's hush money trial, describing for jurors a sexual encounter the porn actor says she had in 2006 that resulted in her being paid off to keep silent during the presidential election 10 years later.
King Charles too busy to see son Prince Harry during U.K. trip
Prince Harry will not be seeing his father King Charles during his current visit to Britain as the monarch will be too busy, Harry's spokesperson said on Tuesday.
opinion Tom Mulcair: Turfing Poilievre from House a clear sign of desperation by Trudeau Liberals
When Speaker Greg Fergus tossed out Pierre Poilievre from the House last week, "those of us who have experience as parliamentarians simply couldn't believe our eyes," writes former NDP leader Tom Mulcair in his column for CTVNews.ca
Apple unveils new iPad Pro with 'outrageously powerful' AI-powered chip
Apple is hoping its latest iPad lineup will breathe new life into its sluggish tablet market. In a pre-recorded live streamed event from its Cupertino, California headquarters, the company introduced the latest versions of its iPad Pro and iPad Air tablets, and an all-new Apple Pencil Pro.
Katy Perry's mom was fooled by AI images of the singer at the Met Gala
Katy Perry did not attend the Met Gala on Monday, but some of the singer’s fans – and even her mom – thought she did.
Your body needs these three forms of movement every week
Movement is movement, right? Not exactly. Here’s what your body is looking for in addition to your morning walk or yoga session, according to experts.
'It looked so legit': Ontario man pays $7,700 for luxury villa found on Booking.com, but the listing was fake
An Ontario man says he paid more than $7,700 for a luxury villa he found on a popular travel website -- but the listing was fake.