CALGARY, AB March 18, 2015 – The Government of Saskatchewan has delivered an investment-friendly budget by extracting more revenue from the potash industry, controlling spending and implementing service cuts.
Faced with a shortfall of nearly $700 million in oil revenues, the province also took on $700 million in new debt for strategic infrastructure investments.
The budget introduced two new tax incentives to encourage business investment and job creation. It also protects health, education and social services.
“The province is continuing to invest in growth and seeking to contain public sectors costs,” said Janice Plumstead, the Foundation’s Senior Economist. “There are no new taxes, and that’s a positive for business.¬ ¬That’s largely because they have turned to the potash industry to bail them out.”
The 2015-16 budget, unveiled Wednesday, allowed small expenditure increases in health, education and social services. All other areas of government were cut by 0.6 per cent, showing the government’s resolve to increase the value extracted from its public service. Some family benefits are taking a hit, as are small businesses, which lose a loan program.
The government partially offset the loss of $661 million from oil revenue by extracting an additional $400 million from the potash industry, by deferring deductions for current capital spending to future years.
Further changes in potash taxation are expected as the government signaled it will review the current regime.
“Taking on additional debt for investments that will support economic growth is an astute approach,” said Plumstead. “Their Triple-A credit rating allows them to get favourable interest rates.”
With a low debt-to-GDP ratio, “They’re probably one of the few provinces in a position to take this on.”
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