A lot of the world’s leaders would love to be sitting in Brad Wall’s chair in the office of the Premier of Saskatchewan. Mr. Wall presides over a province with a strong growth outlook. vast oil, uranium and potash reserves, and a balanced budget – all of which bolster his reputation as a rising political star. But he also manages a province that sits in the eye of a commodities hurricane, with finances buffeted between unexpected windfalls and embarrassing shortfalls. It places huge strains, and expectations, on the Premier, whose conservative Saskatchewan Party assumed office in 2007 after 16 years of NDP governments.
You found a gaping hole in your potash revenue projections last year, and you will dip into savings to balance this year’s budget. Are you living off your future?
I wouldn’t say that. Last year was an anomaly. We didn’t just see a reduction of potash revenues. We saw a complete collapse the likes of which has never ever, ever been seen.
This economy is very resource-dependent, as is the revenue cycle of government. That is not going to change, but the floor for many of those [commodity] prices has changed. We are the second-largest producer of oil in the country, and perhaps in the next year we will become the largest conventional producer. Even through the bash-your-teeth-in international recession we’ve just come through, oil touched $38 (U.S.) a barrel for just a heartbeat and stayed north of $50 through a train wreck of an economy internationally and came back very quickly.
What about potash, which collapsed last year from about $1,000 a tonne to the $300 area?
Potash is in our budget at $310, [the current price is about $340], but only three years ago that would have been a very high price. We’re going to have to deal with the cycles – that’s why we have cash in our savings account and we will have to replenish it. With recent land sales, we are well on our way to putting money back. We are going to budget very cautiously and we did so in this budget in terms of prices of potash, oil and land sales.
As long as you’re exhausting savings, aren’t you squandering the chance to be another Norway?
Norway’s sovereign fund approach is something we’ve talked about for the long term. Our goal is that the savings account stays on average at half-a-billion dollars. There is also the general revenue fund debt [about $4.2-billion] that we want to pay off. Before we think about sovereign funds, I would want to eliminate that debt, and probably make a bit of an investment on the infrastructure side of our electrical utility. I believe the Norwegian approach is solid; we just have some work to do to get there.
It is hard for governments – I don’t care how prescient – to fathom how quickly things can then turn around, and it is positive we lived through that. The lessons? We did pay $2-billion off our debt, but we probably would have done a bit more – and also kept a little more gunpowder dry on the savings account. As it turned out, we weathered the economic storm very well.
Where is the sustainable economy 40 years out?
There is an innovation agenda, and the three legs on that stool are agricultural biotech, uranium value-added opportunities and technology around the post-carbon economy. What’s renewable is we have half the arable acres in the country. India is an important trading partner, and 44 per cent of India’s trade with Canada is from our province. That’s agriculture. So 40 years down the road is a debt-free province that has a sovereign fund, and where our innovation agenda is helping, and agriculture and trade are a big part of it.
Where does your controversial new construction labour legislation fit in?
