Speaking on a conservative open-mouth radio show this week, Saskatchewan Premier Brad Wall suggested that while his province is now running a deficit, its budget remains balanced.
A neat trick. How did he do that?
Saskatchewan Finance Minister Rod Gantefoer explains it all in his mid-year update .
In summary, Mr. Wall’s Conservative government was cheerfully planning to continue their classic Tory cut-taxes-while-increasing-spending fiscal strategy this year, financed by $2-billion in one-time royalties from potash sales.
Unfortunately, as Mr. Gatefoer reported to the Saskatchewan Legislature a few days before it was set to adjourn, this proved a slight over-estimate. Instead of $2-billion, the Wall government is expecting to collect a total of $109-million from potash royalties this year – a $1.8-billion little mistake on total projected provincial revenues of $10.66-billion.
Regina Leader-Post columnist Murray Mandryk recently called this “the second-biggest budget screw-up in our province’s history.” Presumably the worst one was the overall fiscal record of the Devine government, where Premier Wall cut his teeth (and apparently learned his budget lessons) as a political aide.
So the province is going to withdraw $564-million from a reserve fund, another $460-million from a Crown asset sale, is going to pocket some federal infrastructure funding (wasn’t that supposed to go to “shovel-ready” projects?) and will impose a budget freeze and a number of other spending measures to deal with the issue. This is what permits Premier Wall to claim that he is running a deficit while maintaining a balanced budget.
More evidence, if any was needed, that it is fiscal madness to rely on mercurial, one-time resource royalties to pay for tax cuts and spending increases.
A similar abuse of royalties collected from fossil fuels funds populist fraud next door(the “Alberta advantage”, allowing today’s citizens to pretend they live in a low-tax jurisdiction, fuelled by a bonfire of their children’s provincial inheritance). Stephen Harper is inching our national government into similar fiscal addictions, masked for a brief time by recession-driven stimulus spending.
These conservative fiscal ponzi schemes are unsustainable. Services that people want and need must be paid for.
Core provincial services like health, education, justice and transportation should be funded by income and consumption taxes.
Revenues from one-time resources should be invested in productive infrastructure, or (better) held in investment funds, to provide capital for development and annual, repeatable net returns to help with operating budgets.
Premier Wall has an oddly indulgent fan base among conservatives in both the federal Conservative and Liberal parties. He throws fundraisers for them in Toronto, to help cover the bills for his political party in Saskatchewan. Next time he works the Bay Street circuit, he’ll be able to boast that he is as good at running Saskatchewan’s budget as they are at running their finance companies.
(Photo: Sean Kilpatrick/The Canadian Press)
