Set up Sask. heritage fund now, says taxpayers group
Fund could have amassed $13B from 2005-15, Canadian Taxpayers Federation estimates
The government of Saskatchewan may be facing a budget crunch but that doesn't mean it should put off setting up a long-term savings account, according to a taxpayers' advocacy group.
The Canadian Taxpayers Federation recommends that any annual revenue from non-renewable resources in excess of $1.5 billion should be diverted directly to the debt.
"Families make a mortgage payment every month and if they don't, the bank is there to remind them pretty forcefully," said Todd MacKay, with the Canadian Taxpayers Federation.
"Governments borrow a lot of money but they often forget to make payments, and often they forget to make payments for a very long time."
Once the debt is paid off, the money would go into a heritage fund and only the interest earned could be spent by the government.
MacKay said if Saskatchewan had adopted this plan in 2005, it would have amassed about $13 billion by 2015, which would pay $652 million in interest each year.
The government said saving that $13 billion would have required less spending, higher taxes or fewer investments in infrastructure.
MacKay said in years when money from resources such as oil and potash is less than $1.5 billion, there would be no requirement to put money in the fund.
In years when it is higher, it would obligate the government to set that money aside.
The government initially agreed that setting up a fund as soon as possible was a good idea, but Premier Brad Wall later said there was no point creating the fund before the debt was retired.
MacKay said the government needs a firm plan now to ensure it does not overspend during good times.
"When non-renewable resource revenues go up, typically spending goes up," MacKay said.
"We all do that: If we have more money we tend to spend more money. But we can't count on that money forever and so we need to restrain spending a little bit during boom times," he said.