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It's hard to believe that until recently Saskatchewan was a declining, have-not province. Today it is under sound fiscal management and deficit-free. It is also growing in population, jobs and output, and attracting billions in capital investment. Those traits, along with its considerable natural resources, make it the envy of other provinces.
Any politician would love to have the kind of problems Premier Brad Wall has. But that is not to imply Saskatchewan is without its challenges, as the Conference Board of Canada laid out in a report last week. It has much to learn from the poor fiscal choices neighboring oil-rich Alberta has made over the past few decades. Mr. Wall doesn't want to be in a position, when commodity prices bottom out, of praying for another boom which he promises "not to piss away," as the famous Alberta saying goes.
While other premiers are focused on saving their provinces, Mr. Wall is trying to figure out the best way to build his. Here's a look at some of the issues the province must get right to build on its advantages:
Diversification: Developing the Saskatchewan economy so it relies less on cyclical industries is an admirable goal. But there has to be a better way than Saskatchewan's favoured policy of financing labour sponsored venture funds to finance startups. The results have been underwhelming, as they have elsewhere. Saskatchewan has pledged to follow an "innovation agenda" by supporting activities in such areas as clean energy, crop sciences and value-added food processing, but that sounds like the standard corporate welfare game governments play of picking winners and losers and distorting market economics. The government can always do more to cut taxes and red tape and promote the province as a great place to do business (though, admittedly, setting out to diversify one's economy is a vexing challenge to pull off, as the Conference Board acknowledges.)
Infrastructure: Despite spending billions of dollars in recent years on roads, sewers and the like in recent years, the province still faces an "infrastructure deficit." The government has toyed with idea of pursuing public-private partnerships to catch up, an expedient and cost-effective idea.
Give up the Crown: Saskatchewan has a high number of large state-owned companies, providing everything from phone to bus service. As privatized Potash Corp of Saskatchewan and uranium producer Cameco Corp, have shown, commercially-oriented enterprises function much more efficiently and can create far more value free of government ownership. The government should embrace privatization more than it has.
Business climate: It's good, but it could be better. The province is seen as a competitive place to do business and is expected to attract $20-billion to $40-billion per year in capital investments between now and 2030. But in its most recent budget the government backed off a promise to cut its incorporated business tax rate to 10 per cent by 2015 from 12 per cent, which would have brought it in line with Alberta and B.C. The government also left a bad impression on foreign investors when it influenced Ottawa to bar the hostile takeover of Potash Corp. of Saskatchewan by BHP Billiton in 2010. Figuring out how to welcome foreign investors, particularly from China, will be vital in years to come.
(Disclosure: I own shares in Cameco Corp.)
Sean Silcoff is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights , and follow Sean on Twitter at @seansilcoff .
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