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Economic policy: the historic hot button
issue It's a little-known fact that Saskatchewan enjoyed solid economic
growth throughout the 1990s, with its Gross Domestic Product (GDP)
rising by an average of three per cent annually. The province
was second only to Alberta in Western Canada for economic growth.
So why didn't Saskatchewan grow jobs the way Alberta has? Furthermore, why didn't employment grow the way it did in Manitoba, which trailed Saskatchewan in economic growth? Some of the answers lie in the very structure of the Saskatchewan
population, its geography and economy. That means no there is
no likely quick fix , no matter who takes power after Nov. 5.
A major issue in this campaign has been stopping out-migration, particularly by young people. The theme of the Saskatchewan Party has been 'Let's get Saskatchewan growing.' RELATED: Outmigration: historic issue comes to a head Janice MacKinnon, a former NDP cabinet minister who held the finance and economic development portfolios under premier Roy Romanow, is also worried about the province's demographic trend. "We need to retain young people in order to ensure there
are taxpayers here to pay the bills," MacKinnon says. University of Saskatchewan economist Eric Howe is skeptical of
election promises by the three main parties to provide tax incentives
for recent graduates to stay in Saskatchewan, noting that 70 per
cent of his school's students do get their first job in the province. "People choose careers, not tax breaks," agrees University of Regina economist Gary Tompkins. For young hotshots who want to become corporate bigwigs, Calgary is the place to be in Western Canada. It has 51 head offices. Only Toronto and Montreal have more. Regina and Saskatoon have 12 between them. Incidentally, Edmonton has 11, and its metro area population is about the same as Saskatchewan's. Head offices create high-paying work for professionals in the technical, accounting, human resources and legal fields, Tompkins says, adding Calgary is Western Canada's corporate headquarters, and ambitious people will pursue opportunities there. Another source of good-paying jobs is manufacturing. While Saskatchewan
has enjoyed buoyant times in its resource sector in the past three
years, its manufacturing sector is underdeveloped relative to
Manitoba's. About six per cent Agriculture and the jobs problem When you look at the numbers, a major part of Saskatchewan's
jobs problem has been the devastation in agriculture. Between
1990 and 2002, the province saw In the last two years, there's been drought. This year, grasshoppers and the BSE crisis have hit producers hard. High subsidies by the European Union and the U.S. keep production high and prices down, farm advocates say, although agricultural economists point out the real price of wheat has been in slow decline for about 130 years. Technological change since the Second World War
has Action Plan for Saskatchewan When the Saskatchewan Chamber of Commerce released
its Action Plan for Saskatchewan in 2000, it said the following
about agriculture in the province: "Changing agriculture from a commodity-based enterprise to one predicated on processing basic products here before shipping them to consumer markets is considered worthwhile, yet there is resistance to moving off traditional positions around transportation policy or moving from a production mentality to a processing mindset." Saskatchewan has 47 per cent of Canada's farmland, yet a two per cent share of its food processing industry (the province has about 3.1 per cent of Canada's population). It produces the least economic output per acre – a mere $90. In comparison, some provinces produce $400 to $600 per acre. "Merely matching the economic output value in most Canadian provinces would expand Saskatchewan agricultural receipts from $6 billion annually to $30 billion." Paul Martin is a Regina business commentator and consultant who contributed to the writing of the Action Saskatchewan plan. He notes that hog barns and feedlots can produce up to $18,000 revenue per acre. That is 200 times greater than the revenue produced on a typical Saskatchewan agricultural acre. "People resist certain types of development,"
MacKinnon said, giving hog barns and biotechnology as examples. At an Oct. 29 election forum in Saskatoon, candidates
from the three major parties all said they endorsed hog barns,
but the NDP and Liberals said they would try to find ways to mitigate
their more noxious aspects. The New Green Alliance candidate denounced
the practice altogether. Oct. 30, 2003: Hog
barns hot topic in candidates' debate The Saskatchewan Party candidate said his party would not be a financial partner in the development of such barns. Government and the economy That leads to an eternal debate in Saskatchewan politics: what should the role of the public sector be in fostering economic growth? If you scan the list of top 100 Saskatchewan companies,
there aren't many traditional companies at the top of it. You
have co-ops such as Federated Co-operatives Ltd. and the
Government involvement in the economy goes back almost to the birth of the province. In 1906, the province was running three commercial creameries. The grandfather of SaskTel, the Department of Railway, Telephones and Telegraphs, was formed in 1908. The Saskatchewan Power Commission, the forerunner to SaskPower, was created in 1929. Crowns appear to be sacrosanct. This is demonstrated by the
vow of Saskatchewan Party leader Elwin Hermanson that his party
"has no plans" to sell the four biggest ones. The NDP has made political mileage out of hinting the Sask Party might have dark plans for the Crowns. Tompkins says he's disappointed the debate over Crowns in this election never really went beyond "'You're going to sell them,' 'no we're not.'" Oct. 30, 2003: Parties avoid real debate, says academic Howe thinks the importance of the Crowns is declining, calling them "historical artifacts." He was in favour of them eventually being privatized, but "it has to happen gradually," he said. The NDP defends Crowns by saying they contribute to The lessons of Devine When Premier Grant Devine took office in 1982, he declared Saskatchewan open to business. but Howe notes private investment capital didn't exactly rush into the province despite having an avowedly pro-free-enterprise Progressive Conservative government in power - although in fairness, the early 1980s were a time of recession and sky-high interest rates. In his second term, Devine's government got more actively involved
in directly funding business ventures. Some initiatives were successful,
such as the SaskFerco fertilizer plant. Some were disastrous,
like the GigaText automatic translation system. The current NDP government spent much of the spring legislature
session trying to explain why various Crown investments had gone
sour. Its GigaText is Spudco, To deflect the issue going into the election, Premier Lorne Calvert announced an independent board of businesspeople would advise on investments and that each major Crown would have its own minister. On the campaign trail, he stopped at a cake factory in Yorkton on Oct. 29 to showcase how his government's $200,000 had led to job creation and business building. Oct. 30, 2003: Calvert
says public/private mix takes the cake "Government is not very good at directly investing in the economy," MacKinnon says. She would prefer governments assist a sector that needs nurturing rather than pick winners and losers within it. Cutting taxes: a magic elixir? One way the Saskatchewan Party wants to help business grow Saskatchewan
is by getting the tax monkey off its back - along with "rebalancing"
labour laws and cutting the proverbial red tape. It plans to reduce
general income taxes, make Saskatchewan the first small business
tax-free zone in Canada and reduce the property tax take for education
by 15 per cent on both primary residences and The NDP has promised to cut the small business tax. It has reduced personal income taxes over the last three years. MacKinnon advocates targeted tax cuts to create growth, but she says a government had to be sure taxes were indeed what was holding back a particular sector. Governments play a dual role – they must manage the economy
in a way that encourages growth while providing needed services
to society in a way that is fiscally responsible. "All parties want to cut taxes and spend more. It's not sustainable," Tompkins said. Some have pointed to the "common sense revolution"
of former Ontario Conservative premier Mike Harris as being responsible
for that province's prosperity in the 1990s. Part of Harris's
economic prescription included tax cuts. It was revealed Oct. 29 that Ontario will have $5.6 billion deficit
for this year. The NDP government here is also in deficit, but
it is claiming extraordinary costs for things like crop insurance
are the reason. When asked during the Oct. 28 leaders' debate why he thought tax cuts would stop people from leaving Saskatchewan, given that people have still left even though the NDP has cut taxes, Hermanson said the first priority of a Saskatchewan Party government would be to ensure the budget was balanced. Jobs must be created to grow the economy, and the sector that
grows the most jobs is small business, he said. Saskatchewan could
be a leader in all Canada by eliminating the small business tax." The cost to the provincial treasury would be about $50 million
per year, "which is less than SaskTel lost in the past year
on out-of-province investments," he said. Considerations for the future Howe didn't believe the Sask. Party's plan would provide the promised population growth of 100,000 people in 10 years. From his perspective, the province has hovered around a million people for 70 years and that may well be the natural population level. To increase prosperity and opportunity in the age of the information
economy means increasing people's knowledge and skill. While there
are obviously lots of smart people in the province, in general,
it has one of the country's worst-educated work forces. That must
change, he said. Saskatchewan faces some disadvantages. It is the
most trade-dependent province in Canada, is far from its markets
and can easily be buffeted by forces beyond its control, MacKinnon
said. Doug Elliott of Sask Trends Monitor says he was worried about the fast-rising Canadian dollar and the impact that might have on Saskatchewan's exports. In the near term, he is also worried about Saskatchewan's consumers running out of gas, saying their spending has significantly propped up the economy. Along with her thoughts on taxation and the need to retain young
people, MacKinnon endorses the view that the province needs a
highly skilled workforce. Young aboriginals will be the workforce
of the future in Saskatchewan, and Besides producing more revenue per acre, Martin said, Saskatchewan's business community wants to see both the province's population and its private sector grow in size. On July 1, 2005, Saskatchewan will be 100 years old. "We
are often reminded that 50 years ago, Saskatchewan's economy and
population were larger than Alberta's," said the Action Saskatchewan
report, v.1. "Today, when the value of economic activity
is approaching Saskatchewan's total, there is no doubt we have
allowed ourselves to fall far behind our neighbors to the West." Tompkins put it this way: "They [Alberta] won the geological lottery." Alberta is one place to which Saskatchewan can compare itself, but for a bit of schadenfraude, it could look southeast to North Dakota: its population peaked in 1930, even with the lavish farm subsidies the U.S. government pays. Booming populations and economies on the Great Plains may well be the exception rather than the rule.
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