Sask. government's $500 cheques get mixed reaction
Professor says cheques are 'great politics,' but ‘terrible economics’
Recent university graduate Gurav Changar says he's happy he'll be one of 900,000 Saskatchewan residents who will receive a $500 cheque this fall.
"I think it's good because I need the money," he said, noting he'll use it for rent and groceries.
Meanwhile, father of four Judge Cote welcomes any kind of financial assistance, but says the money will only take him so far amid rising costs.
"It's tough to keep the rent paid, as well as food, bills, children. Lots of financial struggles for sure," Cote said.
The Saskatchewan government announced that all residents who are 18 or older and have filed a tax return will get a $500 cheque in the mail in the fall. It's part of the province's "affordability" plan, announced alongside the fact that the government is expecting to finish the fiscal year with a $1-billion budget surplus thanks in large part to a surge in oil and potash prices.
In total, 900,000 cheques will be mailed out, costing $450 million, according to the province.
The cheques are the latest attempt among provinces to help people with the high cost of living. In the spring, Quebec made a similar move, providing a $500 credit to adults earning less than $100,000 and offering more if they're re-elected this fall. Meanwhile, Alberta is offering a natural gas and electricity rebate program.
'Great politics … terrible economics': professor
Moshe Lander, an economics professor at Concordia University, said cash handouts don't suppress inflation — they actually do the opposite by giving people more money to spend, which increases demand faster than supply.
"Whether that's a tax credit or whether that's an actual rebate cheque that comes in the mail, it is inflationary and it should not be done from a good economic standpoint,' Lander told CBC News.
"It's great politics. It's just terrible economics."
Lori Williams, an economics, justice and policy professor at Mount Royal University, noted the surplus could have gone toward health care or education, a sentiment the Saskatchewan NDP has also expressed.
Williams said giving cheques undermines the government's argument that it needs more money from Ottawa to fund health care.
"Of course, Ottawa is going to be reluctant to just hand over money," Williams said.
Saskatchewan Finance Minister Donna Harpauer said resource prices are volatile, so it wouldn't be prudent to use the surplus for operational costs in the health care system.
But Lander said the volatility of resource revenues is why the government shouldn't be handing out dollars.
He said Saskatchewan should learn from Alberta's experience 16 years ago. In 2006, then-Premier Ralph Klein gave every Albertan $400. Then the province's surpluses slid to years of deficits as oil and gas prices went down.
Lander said Saskatchewan should keep that in mind.
The Saskatchewan Federation of Labour, which represents more than 100,000 workers across the province, said it wants the government to take measures that will lower the cost of living for the long-term, such as immediately increasing the minimum wage.
With files from Karen Pauls and Cameron MacIntosh