Saskatchewan Budget 2019: The devil, as always, is in the details
Potash industry might disagree that there are no tax hikes
The next Saskatchewan election is 19 months away, but Premier Scott Moe's government is setting the stage with a 2019-20 budget that keeps spending increases to a minimum even as it seeks to crowd out the NDP and Ryan Meili by touching on many themes close to their hearts.
In presenting what she insists is a balanced budget, Finance Minister Donna Harpauer forecasts revenues of $15.03 billion versus expenses of $14.99 billion, or a razor thin surplus of $34.4 million. Yet the reality is that — including capital spending — Saskatchewan's overall debt is climbing by $1.8 billion over the year to reach $21.7 billion, an increase of $10 billion since just 2015.
The interest payments on this debt, at a time when the cost of borrowing is cheap, will be $694 million this year, nearly identical to what the government spends on protection of people and property through such things as corrections and policing.
Harpauer also points to the budget containing no new taxes or tax increases, as well as what she called a shift away from the reliance of volatile resources to a stronger, broadened revenue base.
Saskatchewan's potash industry might beg to differ about the no tax hike portion, given that the government has eliminated the resource credit for potash production and made Crown and freehold royalties no longer deductible expenses in order collect an additional $117 million in annual revenues from this sector.
While it's arguably an overdue move to simplify Saskatchewan's Byzantine potash tax structure, the fact that the change was made without the benefit of a promised royalty review injects an element of public uncertainty about the process employed to reach the decision, or whether it's indeed the right move under current economic conditions.
As for shifting away from resource revenues, there's nothing in the document to indicate that is the case, given the continued budget reliance on potash, oil and gas revenues into the future. There's no hint of establishing a sovereign fund a-la Norway to stash away even a portion of resource revenues.
The "balance" Harpauer has brought to the budget is largely courtesy of additional revenues garnered by the recent increase to the PST. It's impossible to see how the government can sustain its policy of no-tax-hikes-no-reliance-on-resources for long, especially if interest rates and inflation go up. Don't count on the PST hike being rolled back anytime soon.
What is perplexing from a government ostensibly looking to diversify away from a resource-driven economy is its reluctance to invest more in post-secondary education, where it has held the line on spending.
While there's reference to providing $88 million for the College of Medicine at the University of Saskatchewan and restoring $5 million of the "one-time cut" of $20 million the government forced on the U of S, there appears to be no additional investment to support research or training in high-demand areas such as engineering, biosciences or computer science — an area where Saskatchewan graduates are among the top in North America.
Some much-needed inclusions
The government has certainly made some moves in the right direction.
Moving to restore $26 million to education from the funding that was cut two years ago is welcome, even though it won't be enough to cope with the continued influx of children into the system, many of them without English language skills.
The $30 million funding increase for the mental health sector is laudable, even though the money is less than one-third of what advocates say is needed for a sector too -long ignored by governments of all stripes.
Despite the Moe government's very public disputes with the federal Liberal government over such things as the carbon tax — no mention of this anywhere in the budget, by the way — more than $6 million of the new mental health money came from Ottawa.
The needs may be far greater than can be met with $30 million, but the addition of 22 in-patient addictions treatment beds in Indian Head, Saskatoon and Regina is most welcome, as is the launch of Rapid Access to Addictions Medicine clinics in the two major cities and Prince Albert, as are 18 new mental-health walk-in counselling clinics across Saskatchewan. Making Saskatoon's temporary Mental Health Assessment Unit permanent is an overdue decision.
At first glance, the increase of $51 million for social services and assistance looks promising, but the key will be how it's used.
For instance, the Saskatchewan Assistance Program (welfare) is getting $25 million less, while a program that pays clients to make the transition to employment is taking a hit of $10 million. Meanwhile, there's $50 million allocated to something called "Saskatchewan Income Support," a yet-to-be-explained program that could well be a way to make the assistance program something like the Employment Insurance program, a one-size-fits-all approach to providing support.
The devil, as always, is in the details. The reaction of the stakeholders today and in the days to come will tell a clearer story about how well Harpauer has done.